Shouldn't a poker coach be a tax write-off??

Subbin' in for when the article comes out from deb's bud. Interesting stuff!

WEC are you sure about that? I had a guy do mine because there's just so many complications but my forms say "Professional gambler", which of course means I can deduct roulette/blackjack/dumb table game degening from my income

Just because you aren't making income from your poker profession doesn't mean you can't claim yourself to be one most business's aren't profitable their first year but the owner can still claim himself as the owner of whatever business he is attempting to run

also I could research this but I figure it's easier to ask if you are a professional do you pay less in taxes then a normal gambler would or is it the same percentage.

Sure, you can CLAIM any profession that you want.... And the IRS can deny your claim.

JusSumguy said:

If you want to be a poker pro, all you need to do is put it on your tax form as your profession, and keep all the proper records.

Nobody can tell you what you do for a living. Even if your a 20 year looser, it still applies.

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I disagree with the 20 year loser part. My wife used to breed/show horses as a business. The IRS required her to show a profit (or break even) for one year out of something like every 4. Otherwise they will deny that it is a business and tell you that you have an expensive hobby.

I think this thread is not about if you can call yourself a Poker Professional. WEC pretty much covered that. It is all about *if* you can deduct your expenses, and *how* you keep records to prove it, and provide for self-employment taxes.

I do find it interesting that some Pro's went back to Amateur status because of taxes. Doesn't make sense if they did their deductions right. Yeah the rate may be higher, but you should get more deductions.

arahel_jazz said:

I disagree with the 20 year loser part. My wife used to breed/show horses as a business. The IRS required her to show a profit (or break even) for one year out of something like every 4. Otherwise they will deny that it is a business and tell you that you have an expensive hobby.

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Right. But you can still declare it as your profession, access to deductions, or not. Which leads to the underlying question here.

What does it take for a pro to be able to access the deductions available to her/him?

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arahel_jazz said:

I do find it interesting that some Pro's went back to Amateur status because of taxes. Doesn't make sense if they did their deductions right. Yeah the rate may be higher, but you should get more deductions.

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Probably because of the social security taxes. My ex-husband was self-employed and it was the ss tax that killed us every year not the federal tax.

hackmeplz said:

WEC are you sure about that? I had a guy do mine because there's just so many complications but my forms say "Professional gambler", which of course means I can deduct roulette/blackjack/dumb table game degening from my income

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You can never deduct "roulette/blackjack/dumb table game" loses from your 'ordinary income' in any case. You can only deduct those losses from 'other gambling gains'. If you were declared a professional, you could deduct only your business expenses playing those games, but not from your ordinary income. No matter how you file you can deduct "roulette/blackjack/dumb table game" from any other gambling winnings, including poker, lottery, racetrack, slots, etc


From IRS Private Letter
...a casual gambler not engaged in the trade or business of gambling would
not have deductible business expenses. The casual gambler’s expenses to engage in
gambling are nondeductible personal expenses under § 262. Like any other taxpayer, a
gambler has the burden of proving that his activities rise to the level of a trade or
business. See Merkin v. Commissioner, T.C. Memo. 2008-146.
http://www.irs.gov/pub/irs-utl/am2008013.pdf



The following formula applies in the examples below.

Schedule C

Wagering gains
- Wagering losses, as limited by § 165(d)
Wagering income
- Business expenses
Business income or loss >>> Form 1040

Business income or loss (Form 1040, line 12)
+ Additional income (Form 1040, lines 7-21)
Total Income (Form 1040, line 22)


Situation 1. A is a professional gambler engaged in the trade or business of
playing poker. Gambling is A’s sole occupation; A is not employed and has no other
income. Throughout the year, A traveled to various casinos and other venues where
gambling is legal to participate in poker tournaments. At the end of the year, A had total
wagering gains of $100,000, total wagering losses of $75,000, and incurred $15,000 in
business expenses for transportation, meals and lodging.
A must report the $100,000 of wagering gains as gross receipts. Under § 165(d),
A may subtract $75,000 of wagering losses from the $100,000 of gross receipts,
resulting in $25,000 of wagering income. Under § 162(a)(2), A may then deduct
$15,000 in business expenses from the $25,000 of wagering income, resulting in
$10,000 of business income. POSTN-139898-08 9

Situation 2. Assume the same facts as Situation 1, except that B also had
$10,000 of (taxable) investment income. B must report the $100,000 of wagering gains
as gross receipts. Under § 165(d), B may subtract $75,000 of wagering losses from the
$100,000 of gross receipts, resulting in $25,000 of wagering income. Under
§ 162(a)(2), B may then deduct $15,000 in business expenses from the $25,000 of
wagering income, resulting in $10,000 of business income. B also must report the
$10,000 of investment income as gross income under § 61. B therefore has $20,000 of
total income ($10,000 business income + $10,000 investment income).

Situation 3. C is a professional gambler engaged in the trade or business of
playing poker. Gambling is C’s sole occupation; C is not employed and has no other
income. Throughout the year, C traveled to various casinos and other venues where
gambling is legal to participate in poker tournaments. At the end of the year, C had total
wagering gains of $75,000, total wagering losses of $100,000, and incurred $15,000 in
business expenses for transportation, meals and lodging.
C must report the $75,000 of wagering gains as gross receipts. Under § 165(d),
C may deduct wagering losses to the extent of wagering gains. Therefore, C may
subtract only $75,000 of his $100,000 of wagering losses from gross receipts,
completely offsetting his $75,000 of gross receipts. C may not carry over the excess
$25,000 of (unused) wagering losses to offset wagering gains or other (non-wagering)
income in another taxable year. Under § 162(a)(2), C may then deduct the $15,000
business expense without regard to § 165(d), resulting in a net operating loss of
$15,000. C may carry that $15,000 net operating loss over or back to another year
under § 172(b). POSTN-139898-08 10

Situation 4. Assume the same facts as Situation 3, except that D also had
$10,000 of (taxable) investment income. D must report the $75,000 of wagering gains
as gross receipts. Under § 165(d), D may deduct wagering losses to the extent of
wagering gains. Therefore, D may subtract only $75,000 of his $100,000 of wagering
losses from gross receipts, completely offsetting his $75,000 of gross receipts. D may
not carry over the excess $25,000 of (unused) wagering losses to offset wagering gains
or other (non-wagering) income in another taxable year. Under § 162(a)(2), D may then
deduct the $15,000 business expense without regard to § 165(d), resulting in a
business loss of $15,000 from gambling. D must also report the $10,000 of investment
income as gross income under § 61, resulting is a net operating loss of $5,000 ($10,000
investment income - $15,000 business loss). D may carry this $5,000 net operating
loss over or back to another year under § 172(b).

OK, this is dated but it is an interesting article (2005)

Don't bet against the IRS
Hurdles are high for status as professional gambler

JusSumguy said:

Which leads to the underlying question here.

What does it take for a pro to be able to access the deductions available to her/him?

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This is interesting as well for someone trying to file as professional gambler

Moore v. Commissioner, T.C. Memo 2011-173

To his 2006 tax return, Moore attached a Schedule C and filed as a “pro gambler,” claiming zero “net” gambling winnings (Moore reported $25,534 of wagering losses), and $15,455 of assorted business expenses, reflecting an overall business loss of $15,455. The IRS challenged Moore’s professional gambler status, taking the position that he could not claim the business loss, and that he must itemize his wagering losses of $25,534 on Schedule A....

Because the IRS first raised the professional gambler status issue in its answer, the burden of proof was on the IRS to prove that Moore was not a professional gambler. Accordingly, the IRS was required to demonstrate that Moore did not gamble with the intent to profit. Here are the factors the court considered to make its analysis:

• Manner in which the taxpayer carries on the activity;
• The expertise of the taxpayer or his advisors;
• The time and effort expended by the taxpayer in carrying on the activity;
• Expectation that assets used in activity may appreciate in value;
• The success of the taxpayer in carrying on other similar or dissimilar activities;
• The taxpayer’s history of income or losses with respect to the activity;
• The amount of occasional profits, if any, which are earned;
• The financial status of the taxpayer; and
• Elements of personal pleasure or recreation.

From the evidence presented, the decision was easy for the court to make. He didn’t keep records of his gambling activity. Big mistake. Also, he had never profited from gambling, and did not seek possible ways to improve upon his performance.

This case is informative for a taxpayer who asks the question: Can I file as a professional gambler? Remember, a taxpayer doesn’t have a choice. It’s a matter of whether he/she can show that the above factors as applied to particular facts and circumstances demonstrate one engaged in gambling for profit.

http://taxdood.com/2011/07/18/professional-v-recreational-gambler-status-in-tax-court/

Wow thanks a ton for all the info.

JusSumguy said:

If you want to be a poker pro, all you need to do is put it on your tax form as your profession, and keep all the proper records.

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Like I said.

Nobody can tell you what you do for a living. Even if your a 20 year looser, it still applies.

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Wrong, but skirtable

Thanx WEC... Lotsa work there.

Bottom line here is that anybody can declare themselves a pro, if they jump through the hoops.

Another question.

Can a pro gambler incorporate himself as a professional gambling company?

We have the article but it is going to be posted as a page in the strategy tab so will have to wait on that to be done.

Just a thought-wouldn't being an Admin at a poker forum qualify as a poker professional?

No - if paid that would be a separate/different job.

dakota-xx said:

We have the article but it is going to be posted as a page in the strategy tab so will have to wait on that to be done.

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Very cool. can't wait to read it.

Here you go - if you like the article please tweet it and like it using the facebook and twitter icons on the strategy page:

Poker Taxes - Filing as a Professional or Recreational Player

You can deduct pretty much anything, just make sure you have proof like receipts. You don't want to get audited later on. Paying taxes upfront on winnings is always best, but it depends on the person.