IRS 25% witholding of poker winnings

[marksalot300]

I think that Mickey's point is that the poker player shouldn't get nailed
25% for every penny that he won, only for the profit. If "Joe" spent $18,000
in entry fees and won $21,000, he should get popped on only the $3,000. It
would be fairly simple to do, even in a huge multi-event series like the recent
WSOP where one 1099 could be issued per player with the total profit noted
for all events combined. Of course, the IRS would never see it like that
because they'd lose the free use of the money until Joe filed for his refund.

- Brian in MI

vp1040 writes:

In a message dated 9/7/2007 2:00:43 A.M. Eastern Daylight Time,
mickeycrimm@yahoo.com writes:

Joe is just going to have to wait nine months until tax time to
get back his interest free loans to the IRS. Minus the $840 he owes
on the $3,000 win, of course.

And when all is said and done all he paid was the taxes he owed on his
winnings. An interest free loan is not a good thing but it could be alot
worse.

************************************** Get a sneak peek of the all-new AOL at
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[Non-text portions of this message have been removed]

[Mickey]

What is said below is all true, but the bigger point is that, with
his bankroll dwindling, Joe has to head back home. He is lost to the
poker economy for the rest of the year. There will be one less
player in the tournaments. And Joe is rethinking whether it is worth
it to play the tournaments.

This is the situation that the great bulk of tournament players will
face. Not the Rock Star Top Pros living large in Las Vegas, but the
slightly above average, average, and below average players that
represent the bulk of the field. They don't have infinite
bankrolls.

When 10% of the tournament field cashes, that means 90% of the field
loses. The great bulk of tournament players are losers in the long
run. Joe is a slightly above average player. But he is fighting an
uphill battle. Poker tournaments are negative equity affairs. A
Harrah's circuit event takes 10% juice plus 3% for the dealers and
floor personnel. That is typical of what is being raked today. In
his book "Casino Tournament Strategy" Stanford Wong's advice for
negative equity blackjack tournaments is "Don't Play."

Being slightly above average won't keep Joe in the tournaments for
the year. Now, besides expenses, Joe has to contend with IRS
interference. Is it worth it to Joe to continue? This is the
question the great bulk of tournament players will face.

I think that Mickey's point is that the poker player shouldn't get

nailed

25% for every penny that he won, only for the profit. If "Joe"

spent $18,000

in entry fees and won $21,000, he should get popped on only the

$3,000. It

would be fairly simple to do, even in a huge multi-event series

like the recent

WSOP where one 1099 could be issued per player with the total

profit noted

for all events combined. Of course, the IRS would never see it

like that

because they'd lose the free use of the money until Joe filed for

his refund.

- Brian in MI

vp1040 writes:

In a message dated 9/7/2007 2:00:43 A.M. Eastern Daylight Time,
mickeycrimm@... writes:

Joe is just going to have to wait nine months until tax time to
get back his interest free loans to the IRS. Minus the $840 he

owes

on the $3,000 win, of course.

And when all is said and done all he paid was the taxes he owed on

his

winnings. An interest free loan is not a good thing but it could

be alot

worse.

************************************** Get a sneak peek of the all-

new AOL at

···

--- In vpFREE@yahoogroups.com, Marksalot300@... wrote:

http://discover.aol.com/memed/aolcom30tour

[Non-text portions of this message have been removed]

[Mickey]

Her is a simplified example that mayle shows the ridiculousness of
the situation.

Our hero, Joe, is an Average Player. He comes in around breakeven.
So he heads to the WSOP with his $20,000 bankroll.

He decides to play the $1000 buy-in, plus $25 juice, one-table Sit n'
Go's. They are played ten-handed with a prize pool of $10,000 and
it's "Winner Take All." An SnG takes an hour to an hour and a half
to play. Unless you get knocked out early in which case you just
roll into the next SnG.

Joe plays in 10 SnG's over the next two days. He loses the first
nine. On his tenth SnG he wins. The house deducts $2500 for the IRS
and hands Joe $7500. He has hit his expectation (being a breakeven
player his expectation is to win 1 in ten.) But his in-pocket
bankroll is now only $17,250.

He plays another ten SnG's over the next couple of days and hits his
expectation again. He wins 1 in ten. Now his in-pocket bankroll is
only $14,500.

If Joe keeps playing and hitting his expectation he will be broke in
a week. Sure, he will get a nice tax return nine months down the
road but all that is going to do is replenish the money he had in his
pocket before he started playing. All Joe has accomplished is making
loans to the IRS. For now he is out of action. And since he is out
of action the house can no longer continue to make the juice off of
him. He is lost to the poker economy.

But how about a player who is good enough to win 1 in 7 of these
SnG's. Through 70 events, if he hits his expectation (10 wins) it
would be a $28,250 win. But his in pocket bankroll will have grown
by only $3250 because he has made $25,000 in interest free loans to
the IRS. This just goes totally against the nature of a poker
player. He is not going to risk his money today so, if he wins, he
can get paid nine months down the road.

[Peter]

The IRS does not have "free use" of your money. As I said earlier, your gripe is not with the
IRS, it is with the Congress.

..... bl

···

--- In vpFREE@yahoogroups.com, Marksalot300@... wrote:

the IRS would never see it like that
because they'd lose the free use of the money until Joe filed for his refund.

- Brian in MI