Proposed book profiling big online winners - Page 7

KRANTZ · #61 03-07-2007, 11:14 AM

damn rekrul you need to get an accountant...

Rekrul · #62 03-07-2007, 11:21 AM

I am yet to file.

I have not thought this out but:

Lets say you have 5 million liquid non poker related in ur bank earned from other [censored] to cover the taxes you might have to pay on what the IRS has deemed as your earnings without having to cash out your bankroll.

Year 1 you earn 1 million dollars on online poker, cash out 100k (irrelevant), and pay taxes on the 1 million you earned. (however much that might be....lets just pretend its 500k).

Year 2 you lose 2 million on online poker. No taxes needed.

Year 3 you win 1 million on online poker. You gotta pay taxes on that too? Even if you don't have to you are completely even (actually up the 100k you cashed out) from gambling does the IRS owe you back what you paid taxes on?? (minus the taxes u should owe on the 100k)??????

If the IRS was allowed to pick their spots on when and where to tax what you 'earn' they could decide that every winning day to tax you and to ignore every losing day. Kinda hard to beat that. I know they only do it once a year...but as an on-going poker professional it is possible to run bad for half a year (or more? super super unlikely but still....) and its hard to just draw the line at a one year mark.

My previous years were always small wins and cashing out everything that I earned so paying was very simple and clean as my roll was always less than 20k and going busto to 20k all the time but this year might prove a pain in the ass lol.

sawseech · #63 03-07-2007, 11:46 AM

You are correct to believe that existing U.S. tax code is unfair to online poker professionals (hereafter OPPs).

The current treatment of OPPs by IRS/DOJ is to net session-by-session results over an annual basis, but to disallow the carryover of losses to future years. That is to say, OPPs are treated like someone selling lemonade out of their garage and not like the small businesses that they are. The net annualized result is recognized on a revenue basis, and not cash; that is to say, what you won is your net, not what you cashed out.

The IRS implicitly recognizes that the present taxcode is unfair to OPPs, because OPPs constitute the exception to the rule in that they are big winners, but often lack subsidiary/substitute income to which their present years losses (if incurred) could be applied to offset and make the taxation fair in comparison to other citizens. Hence, IRS/DOJ have generally adopted a policy of limited-leniency with regards to reporting on a mostly cash basis, because they have no desire to break someone paying several hundred thousands of mostly untracable dollars of taxes on income which they could not easily follow if left to their own devices.

pokerprochris · #64 03-07-2007, 11:48 AM

He is borderline terrible

Rekrul · #65 03-07-2007, 11:54 AM

Also, what if you logged all your session to session results and in year 2006 you earned 1 million dollars (but only cashed out 100k). Then on January 1st, 2007 you decided to take a shot at the biggest games online and lost your 900k. Then what?

U going to jail?

Obviously, they'd just tax you on the 100k in this case as it's only fair.....but how far can you stretch it?

What if the day you lost it all was any date before the time you actually paid your taxes in 07'?

What if you only lost 100k on January 1st 2007 (or right before paying taxes) and didn't play a single hand of poker after that up until filing? U getting taxed on 1 million or 900k?

Rekrul · #66 03-07-2007, 11:59 AM

And what if you earned 1 million dollars in 06', only cashed out 100k, then in 07' the government passed laws that made it impossible for you to cashout and even stole your money in neteller, so you couldn't even cashout the money needed to pay taxes on the 1 mill? THEN WHAT?

[censored]

TheWorstPlayer · #67 03-07-2007, 12:23 PM

Dude, get a clue. Call a CPA. You are trying to bring rationality and fairness into a place where they don't exist. This is the IRS. If you win a million dollars in '06 and then lose it all in '07 before paying your '06 taxes, you do not get a get-out-of-jail-free card. You still owe the IRS the money. How you pay it is your problem. If you dont pay it, they will fine you and/or throw you in jail. However, if you really owe them a lot of money and can't pay it, I hear that they might negotiate with you...

Just be smart and pay estimated quarterly taxes and/or set money aside for tax paying and then you won't have a problem. And DEFINITELY GET YOURSELF A CPA BEFORE YOU GO TO JAIL.

spino1i · #68 03-07-2007, 12:41 PM

In all honestly I doubt anything will happen to Rekrul at all as long he keeps his money on Stars. The IRS cant see or trace that money. However if any of it touched Neteller, the IRS now has records of it..

BKiCe · #69 03-07-2007, 04:36 PM

does anyone have any good recommendations or references to a CPA with extensive knowledge about gambling (specifically, poker) tax law? a pm would be fantastic, i have spent a lot of time over the past week or so talking to cpas and trying to learn/figure out tax stuff but so far i feel like every CPA i have talked to is incompetent with regards to my semi-unique situation.

Orlando Salazar · #70 03-07-2007, 05:14 PM

If you are filing as a pro, get a CPA, pay quarterly based on pokertracker stats.
If not and you have a job or are a student, keep great records on cashouts pay taxes on whatever hits your neteller/epassporte account/bank account, net of any deposits for the year. I know everyone is scared of the IRS. But, reality is, if you are reporting income and paying on it, the most you will owe them is interest.