A legal / tax issue

Cactus Cactus · #1 06-13-2007, 06:25 AM

For anyone out there who has an idea of this legal/tax issue please inform me.

you have Friends from A, B, and C.
you get A, B, and C to sign up a neteller account and a party poker account. You play under their names and for the tax year you win 100,000 in each of their names. You cash out the 100,000 into their bank accounts. So you win 300,000.

Can you write in your tax return that all the money earned by players A, B, and C will be yours and you will pay tax on 300,000 accordingly? Is that legal? I know I should definitely see a lawyer about this, but just wondering if anyone knew off the bat?

thanks

broiler · #2 06-13-2007, 08:14 AM

Income is supposed to be reported by the person who earned the money. The problem here is that the trail leads to an outside observer (IRS & State) seeing income to A, B & C.

I would assume that each person eventually transfers the money to you. Documentation is the key here. You need to have something in writing to prove what arrangement exists. All transactions between you and your friends should be clearly documented and recorded by all parties involved.

The biggest problem in the future is that an audit of one of your friends will likely get everybody audited. I say this because they will undoubtedly tell the auditor that it is your income and possibly tell the auditor that other people are involved in similar transactions. People under audit are notorious for throwing others under the bus.

Summary: There is nothing that appears illegal from the tax side of this, but documentation is your friend here.

And because I must: Pursuant to Circular 230, any tax advice contained in this response has not been prepared to be used, and cannot be used, by any person for the purpose of avoiding the appropriate payment of tax, interest, and/or penalties imposed by the Internal Revenue Code.

Cactus Cactus · #3 06-13-2007, 01:34 PM

hey thanks a lot for the help

pal=m · #4 06-15-2007, 03:44 PM

You do have the other legal issues though. I'm no lawyer, but you are misrepresenting yourself as another person. If it can be proven you are doing so to dodge certain laws, and we all know what they are, you could probably be found guilty of several things (so could friends A,B,C for allowing it to happen).

If you earned the money, you are required to pay taxes on it. You may not get into any trouble, but legally I think you and friends A,B,C are breaking laws whether you pay the taxes or not.

All that being said, I'm dancing the tight rope as well, but I'm not happy about it.

pal