State Taxes on Tournament Winnings

Double Eagle · #1 10-10-2007, 03:10 PM

How does a tournament professional who is staked report his state taxable income in the following scenario.

1) His staking deal is 50% of winnings after makeup.
2) He plays 5 10k tourneys in Nevada and doesn't cash.
3) He cashes in a 10k tournament in California for 200k and receives 70k from his backer after makeup ((200k-60k)/2).

What is his taxable income in California, 95k (CA tourney winnings less CA tourney expenses) or 70k?

Flatlanman3 · #2 10-10-2007, 03:14 PM

70k would seem right, however i would suggest the following things

1. Make sure your backer is paying his share of taxes on his so you arent held accountable for it.
2. Obtain complete records of the staking and transactions and losses in those 5 10k tourneys.

Since youre a professional, you shouldnt have a problem deducting the 25k for expenses.

Double Eagle · #3 10-10-2007, 03:24 PM

Ok, I was afraid that my expenses for Tournaments in other states would not be deductible against California income. Now what if the order was reversed and my cash in California came prior to blanking the Nevada tourneys, would I still get to deduct them?