vpFREE2 Forums

Tax question

#1

Funny that Jean's post about her book just popped up as I started to write this. I am actually reading the book, but I had a couple of questions.

I am going to just file an extension but I'm trying to figure out how much estimated tax I should send in. I have a job but made more than that with video poker last year, spent more time playing VP, and have logs to show it. There's no question that I can file as a professional, right?

Also, with respect to freeplay, gifts, and comps it was an eye opener to me that gifts and comps really don't have to be reported. A couple of questions though... say I get a coupon for $50 dining in my mailer or through some kiosk promotion. Does this have to be reported if I use it?

Also, a much bigger question, what about points that you have? For example say you have 1000 players club points that can be turned into $1000 freeplay, $1000 dining, $1000 cash back, or $1000 in gift certificates. For each of these scenarios, would it be proper to report or not report it?
     
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#2

Also, with respect to freeplay, gifts, and comps it was an eye opener to me that gifts and comps really don't have to be reported. A couple of questions though... say I get a coupon for $50 dining in my mailer or through some kiosk promotion. Does this have to be reported if I use it?

I was audited a long time ago and I volunteered the information that I
hadn't included comps in my income. The auditor said "I didn't hear
that" and never made an issue out of it.

Also, a much bigger question, what about points that you have? For example say you have 1000 players club points that can be turned into $1000 freeplay, $1000 dining, $1000 cash back, or $1000 in gift certificates. For each of these scenarios, would it be proper to report or not report it?

I account for these on a cash basis and have never had a problem.

Accounting for comps and points probably both fall into the large
category of issues for which there may be a technically correct way to
do it, but, for practical purposes, you might as well do it the way
you want to, since the most you're going to risk is to be billed,
possibly with interest and penalties, which, generally, has a tiny
chance of happening. It's not in the same league as, say, having many
$9900 transactions with banks.

#3

“Free play, gifts, comps” These are all gray areas – not specifically mentioned in any IRS rules or regs. They are discussed in my tax book, with how different people look at them in different ways. Then you have to decide your own personal decisions, depending on your particular opinion – or consult a tax preparer professional who will give you an opinion based on his past experiences with these issues.

···

------------------------------------------
Jean $¢ott, Frugal Gambler
http://queenofcomps.com/
http://jscott.lvablog.com/
UPDATED TAX BOOK
(Download 2015 eBook now)

From: mailto:vpF…@…com
Sent: Saturday, April 11, 2015 4:38 AM
To: vpFREE@yahoogroups.com
Subject: [SPAM]Re: [vpFREE] Tax question

Also, with respect to freeplay, gifts, and comps it was an eye opener to me that gifts and comps really don't have to be reported. A couple of questions though... say I get a coupon for $50 dining in my mailer or through some kiosk promotion. Does this have to be reported if I use it?

I was audited a long time ago and I volunteered the information that I
hadn't included comps in my income. The auditor said "I didn't hear
that" and never made an issue out of it.

Also, a much bigger question, what about points that you have? For example say you have 1000 players club points that can be turned into $1000 freeplay, $1000 dining, $1000 cash back, or $1000 in gift certificates. For each of these scenarios, would it be proper to report or not report it?

I account for these on a cash basis and have never had a problem.

Accounting for comps and points probably both fall into the large
category of issues for which there may be a technically correct way to
do it, but, for practical purposes, you might as well do it the way
you want to, since the most you're going to risk is to be billed,
possibly with interest and penalties, which, generally, has a tiny
chance of happening. It's not in the same league as, say, having many
$9900 transactions with banks.

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

#4

Any chance you can send these questions off to Marissa or speak to how you specifically deal with them? I acknowledge that I am just asking for informational purposes, there is no engagement letter, there is no formal relationship between me and anyone else that offers advice, etc.

1. A casino gives me a $50 dining coupon via mailer - it has an expiration date. Is this taxable income when I use it?

2. A casino gives me a $50 dining coupon after I played for an hour - it has an expiration date. Is this taxable income when I use it?

3. I earn 1000 points at a casino and can use them to get $10 freeplay or $20 worth of food at the restaurant. Are either of these taxable income when I use them, and if spending my points on food is, do I say that was $20 (food value) or $10 (cash value) worth of income?

4. I earn 1000 points at a casino and can ONLY spend the points on gifts at the gift shop. Is this taxable?

5. I earned $50 in gas gift cards while playing (did not spend points on them), are these taxable?

In my mind, prior to reading the book, I would have thought that only 3 (both food & freeplay) was taxable, and 5 was taxable. However, after reading the book, especially when it says gifts are not taxable, I'm pretty strongly inclined to believe 5 is not taxable, and 3 may only be taxable if you take the freeplay.

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#5

I have a friend that is a tax accountant in LV. A big chunk of his practice is with professional gamblers, including some well known poker pros.

He might be able to help. I have no idea what his fees are, or if he can take on a client this close to the filing date. Since my wife and I live in Texas, we've never had to deal with pro gambling taxes, or use his services.

Here is his web site. http://www.claytontax.com/

Edmund Hack

#6

I filed with him a number of years ago when I was playing poker professionally, so I know him well. I am filing an extension anyway and I'm going to send in a chunk of money, but I'm more curious about those specific issues for when I do finally file the full return later this year.

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#7

Marissa or I do not give out specific tax advice on public forums or in e-mails. This would not be ethical as we would not know individual facts and circumstances in each case. Marissa is an EA and has a business that includes tax preparation. You would need to contact her personally to find out her fees and set up an interview.

As I mentioned in an earlier post, all of your questions have been discussed in Chapter 3 of Tax Help for Gamblers. However, all of the subjects you mention are gray areas. Marissa has given some of her professional opinions in the book but with the disclaimer that there is no standardized interpretation of these issues by various tax preparers or even by IRS employees.

This is not really a good forum for you to get answers to your questions. Most tax professionals would not give opinions here. So the most you will get are personal opinions or personal experiences by non-professionals. Some of this information might be food for thought – but not guidance that is “God’s truth.” You need to check with a tax professional who will look at your total financial picture.

···

------------------------------------------
Jean $¢ott, Frugal Gambler
http://queenofcomps.com/
http://jscott.lvablog.com/
UPDATED TAX BOOK
(Download 2015 eBook now)

From: mailto:vpF…@…com
Sent: Saturday, April 11, 2015 6:20 PM
To: vpFREE@yahoogroups.com
Subject: [SPAM][vpFREE] Re: Tax question

Any chance you can send these questions off to Marissa or speak to how you specifically deal with them? I acknowledge that I am just asking for informational purposes, there is no engagement letter, there is no formal relationship between me and anyone else that offers advice, etc.

1. A casino gives me a $50 dining coupon via mailer - it has an expiration date. Is this taxable income when I use it?

2. A casino gives me a $50 dining coupon after I played for an hour - it has an expiration date. Is this taxable income when I use it?

3. I earn 1000 points at a casino and can use them to get $10 freeplay or $20 worth of food at the restaurant. Are either of these taxable income when I use them, and if spending my points on food is, do I say that was $20 (food value) or $10 (cash value) worth of income?

4. I earn 1000 points at a casino and can ONLY spend the points on gifts at the gift shop. Is this taxable?

5. I earned $50 in gas gift cards while playing (did not spend points on them), are these taxable?

In my mind, prior to reading the book, I would have thought that only 3 (both food & freeplay) was taxable, and 5 was taxable. However, after reading the book, especially when it says gifts are not taxable, I'm pretty strongly inclined to believe 5 is not taxable, and 3 may only be taxable if you take the freeplay.

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