#1
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reinvesting poker profits to avoid taxes
I've been reading rich dad poor dad and they were saying that one of the ways the rich get rich is that businesses can reinvest their profits from a business back INTO that business before the profits get taxed. Is it possible to do this through poker? Reinvesting poker profits back into "captzeebo corporation" aka some sort of real estate investment?
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#2
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Re: reinvesting poker profits to avoid taxes
I think he was only talking about real estate when he said that. I could be wrong though (just finished the book - it was good)
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#3
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Re: reinvesting poker profits to avoid taxes
Earlier in my career I wanted to try and not pay taxes on my bankroll because that was money invested in my business. Everyone told me it wouldn't fly though.
Krishan |
#4
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Re: reinvesting poker profits to avoid taxes
I really don't think this idea would fly. I could be wrong, but it seems that if a corporation "reinvests" its profit, it is making capital expenditures that reduce its tax liability.
Even if you could somehow set up a corporation in the business of playing poker, I'm not sure what kind of expenditures would be legitimate for business that would qualify for some kind of deduction to your tax liability. If you made the stretch and invested the money in real estate under the assumption that this piece of real estate is an asset to the business, you would, at best, only be able to deduct depreciation of the real estate over x amount of years (this ignores the fact that a section 179 deduction might be applicable). You would ultimately still pay tax on most, if not all, of your poker income (aside from what you can deduct as a business deduction). I'm not 100% sure that this is right, but it's my impression of the matter. |
#5
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Re: reinvesting poker profits to avoid taxes
He's referring mainly to real estate with regards to that issue I believe. If I remember correctly it's a tax code (1030 or 1035 or something) which prevents you from being taxed on gains from land/real estate ONLY if you reinvest it in higher value land/real estate.
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#6
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Re: reinvesting poker profits to avoid taxes
Reinvesting in your business means that income never shows up as income. Since in poker your income immediately shows up as your income (more like a regular job) you have nothing to reinvest in. |
#7
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Re: reinvesting poker profits to avoid taxes
[ QUOTE ]
He's referring mainly to real estate with regards to that issue I believe. If I remember correctly it's a tax code (1030 or 1035 or something) which prevents you from being taxed on gains from land/real estate ONLY if you reinvest it in higher value land/real estate. [/ QUOTE ] I believe it's 1031. And the idea that incorporating your business provides you with magical write-offs is just one of Robert Kyosaki's many misguided ideas. The IRS isn't going to let you make a large profit and then declare you are "investing" it in your poker bankroll to avoid taxes. You need to actually buy things, i.e. capital investments such as property, goods, etc. Capital investments are actually depreciated over time, i.e. you can't deduct the total purchase price immediately, only a portion each year over their effective life. Even in situations where you get faster or immediate depreciation (such as the recent "buy a SUV and write it off immediately" break) remember that you are spending more money than you save from the tax writeoff. If you find the book inspiring, that's fine, but please don't take Kyoskai's wealth building tips seriously... |
#8
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Re: reinvesting poker profits to avoid taxes
Yeah, seriously, captzeebo, rich dad poor dad is for suckers.
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#9
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Re: reinvesting poker profits to avoid taxes
someone should update the reading list if people are saying that book is terrible
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#10
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Re: reinvesting poker profits to avoid taxes
Yea someone else said it succinctly.. It's only when say you have a 400k house sell it and use that money to buy say a 600k house so you don't get taxed twice. Essentially, it's like a trade - when you sell the 600k house you get taxed tho in the bum.
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