Pay on withdraws or earnings?

[arardor]

Do you guys advise losing players to file?

Do you also include lottery tickets?

[Taylor Caby]

not to hijack, but does anyone have a reputable CPA that I can talk to about my taxes? A PM would be appreciated.

tc

[pygmyhipo]

[ QUOTE ]
You are sadly mistaken. The law is quite clear: when you have "constructive receipt" of gambling winnings, it's taxable income.

[/ QUOTE ]

The Pokes Poker situation makes for an interesting case. I have had a 5-figure withdrawal pending since early October. I have another 5-figure balance still on the site. Casinomeister reports over $100k owed to other players as well, with no recent payments made. Given that Pokes says withdrawals are paid within 2 days, at this point it is reasonable to doubt whether the "constructive receipt" threshold for all of these winnings has been met.

-pyg

[cheiro]

[ QUOTE ]
[ QUOTE ]
People say "contact a tax professional"....

Talk to a CPA who lives in the real world. LISTEN to them!

[/ QUOTE ]

So, for you, "tax professional" should mean "someone who tells you what they think you can get away with, but won't suffer any punishment if they're wrong"?

[/ QUOTE ]

This is incorrect thinking. CPA's have a high amount of liability associated with their responsibilities and their license. The relationship is not priveleged as an attorney-client relationship is. If you disclose everything to your CPA, and they cheat on your taxes for you, then they are legally responsible.

[ADS]

Just a quick note/question on this:

I am a CPA as well...do not really work on taxes though...except my own.

I want a refinement of the term "constructive receipt".

How can money which is held by an ILLEGAL ENTITY (based on the stance of the DOJ) be considered constructively received? Could there not be an automatic argument that it cannot be constructively received in this situation? (at least an argument?)

[Russ Fox]

Given that you're a CPA, you undoubtedly know that illegal income is just as taxable for US citizens as legal income. The doctrine of constructive receipt has nothing to do with the legality of the income; it has everything to do with whether or not the taxpayer has the ability to access the income.

For example, a very good case can be made that winnings deposited into a players' account at Pokes Poker haven't been constructively received because a player might not be able to get them off the site (see the Pokes Poker Cashouts thread). That same argument wouldn't hold water with the IRS for a player at PokerStars, though.

-- Russ Fox (EA)

Co-Author, "Why You Lose at Poker"

[ADS]

My post did not intimate (at least it was not meant to) that the question of the legality of the income had any bearing on the legal reportability of the income. Nor do I want to intimate that the poker income is not legal in any way, because no where does the law state that (i don't believe).

But rather whether there is at least an argument that LEGAL POKER PROFITS should not be considered constructively received when held by a foreign Illegal (in the eyes of the DOJ) entity. Let's remember, this is not a foreign financial institution, but rather a foreign illegal bookie operation.

What if this was not the famed Pokerstars, but rather JoeShmoebookie.com? Sure, he has honored every withdrawl request to date, but who knows?

Are you saying the constructively receipt answer would be different for different sites based on their financial strength/viability?

Normally constructive receipt is when you are sent a check (I believe) or when you have immediate access to the funds. There could be an argument that this does not fit when looking at an illegal foreign bookmaking operation (not a foreign bank) where you have to almost jump through hoops to get your money (middle man...neteller...etc...) is all I am saying. I don't think it is a slam dunk conclusion that all monies sitting in these sites should be considered constructively received. I may wrong though.

I do agree with you in spirit and principle....but these are dealings with the IRS...throw those out.

[Russ Fox]

Some things in tax are black and white: there's only one way to handle them. Many, many others fall into gray areas. In poker, the answer to a large number of questions is "it depends." The same thing is true in tax.

[ QUOTE ]
Normally constructive receipt is when you are sent a check (I believe) or when you have immediate access to the funds.

[/ QUOTE ] This is not exactly true; constructive receipt occurs when the taxpayer has access to the funds. If a taxpayer doesn't have immediate access, constructive receipt occurs when the customer does have access.

Since I am a professional tax preparer, I can't answer specific questions without putting in a disclaimer (Circular 230 rules). The Tax Court has held that constructive receipt includes the ability to make additional wagers with gambling winnings. A case can be made that with (say) Pokes Poker, you can not get your money out, and that you don't really have constructive receipt.

[sdfsdf]

iirc dutch boyd never got in legal trouble for stealing people's money. if we aren't legally entitled to the money that is in our accounts in poker rooms, how can it be taxable?

also, can we claim rake as a deduction?

[riverfish1]

with the new legislation in place, then constructive reciept doesn't occur until the funds are in your bank account. Since banks can't deal with offshore poker sites you don't technically have access to your funds until they are in your bank account. Or am I missing something here?