Incorporating yourself as a Professional Gambler:

[cbloom]

[ QUOTE ]
I talked to my CPA and he said basically the lady who wrote the book is wrong. He went on to say if I make 400k this year, 300k of that would be corporate profit and the other 100k would be my "salary", upon which I'd have to pay self-employment tax on. (Saving me 12,000 which I will be giving to charity instead of uncle sam)

[/ QUOTE ]

This sounds almost entirely wrong and perhaps illegal. First of all, "self employment tax" is just the social security & medicare tax that is normally paid by an employer. If you make a corp and pay yourself, the corp would be responsible for those same taxes, so you aren't avoiding anything. Second of all, that 300k of corporate profit that you aren't paying as salary can only be spent on business expenses - if you use any of it on yourself you invalidate the separation of yourself and your S-corp as legal entities.



Now, there IS one reason why a professional gambling corporation is attraction : spreading out big wins over several years. But that doesn't work very well in practice for various reasons unless you do something very clever that I don't know how to do and probably isn't worth it.

[krishan]

[ QUOTE ]
filing as a professional isnt a prerequisite for writing off expenses.

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Can you elaborate? I'm under the impression that filing as a pro/schedule C is required to write off expenses.

Krishan

[Thremp]

[ QUOTE ]
[ QUOTE ]
filing as a professional isnt a prerequisite for writing off expenses.

[/ QUOTE ]

Can you elaborate? I'm under the impression that filing as a pro/schedule C is required to write off expenses.

Krishan

[/ QUOTE ]

Word.

[Jimbo]

[ QUOTE ]
filing as a professional isnt a prerequisite for writing off expenses.

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Sorry Ray, gotta disagree with you here, unless you mean that it isn't a prerequisite unless you get audited. I researched this very carefully before I retired and moreso afterwards. Zero expense deductions for non-pro filing, you must use a schedule C and even then be able to prove you run your gambling like a true business. Complete with books, daily poker logs, concise mileage and auto expense logs. Keep your expense receipts, learn what travel, lodging and food expenses are deductible and to what limits.

Otherwise it just becomes another "hobby" and you cannot either claim expenses, net out your earnings nor carry forward losses to future years. For some it may not pay to file as a professional but in order to write off a single dime of expenses you must do so.


Jimbo

[Ray Zee]

that quote was a reply to my first post.
you dont have to have as your profession on the tax return, professonal gambler, to write off expenses. having that may affect your chances of getting loans for a house or investment in the future.

[Jimbo]

Thanks Ray, I understand your reasoning now.

Jimbo