View Poll Results: Would a winner voluntarily pay his taxes on the win?

Voters
8. You may not vote on this poll
  • Yes, because winners want to show the world they really won.

    0 0%
  • No, because winners want to keep the profits.

    3 37.50%
  • Maybe.

    4 50.00%
  • I don't know, I never had a winning year.

    2 25.00%
Multiple Choice Poll.
Results 1 to 13 of 13

Thread: Would a winner voluntarily pay taxes?

  1. #1
    After our recent soap opera involving gambling profits and tax returns, a question: do you think a casino winner will voluntarily pay taxes? Or do you think a winner would fudge on their losses to lower or even eliminate their tax bill?

  2. #2
    Originally Posted by Alan Mendelson View Post
    question: do you think a casino winner will voluntarily pay taxes?
    Absolutely.

    I know one machine player who claims to pay taxes on all of his W2Gs without deducting any losses, because he believes it protects him from scrutiny in case of an audit...as he keeps no gambling log to substantiate losses.

    Others indicate that they under-report their losses, for similar reasons, they believe that deducting losses equal to 100% of their W2Gs would raise a red flag, triggering an IRS audit.

    There are likely thousands of tourists who gamble maybe once a year, hit a hand-pay, and just pay the taxes.
    How many of these type of players would keep gambling logs and deduct losses?

    Originally Posted by Alan Mendelson View Post
    Or do you think a winner would fudge on their losses to lower or even eliminate their tax bill?
    That's pretty likely. If you keep a log, you could easily over-report your losses on any given day.
    Last edited by coach belly; 01-07-2016 at 10:35 AM.

  3. #3
    Different professional gamblers have different motivations. Do you want to pay FICA and put money in an IRA, invest money in real estate, with your gambling winnings?

    Here's an interesting quote from the late Johnnie Moss, who the IRS relentlessly chased:

    "Money in a shoe box isn't worth anything."
    Last edited by slobdinger; 01-07-2016 at 10:38 AM.

  4. #4
    I don't feel that gambling taxes are fair.

    Gambling is not a zero sum game. In a very high percentage of gambling transactions, the odds are very much stacked against the player. Yet despite that, when the player loses, he doesn't get to deduct that from his income (only against other gambling winnings that same calendar year).

    That's unfair, as gambling will reduce income for almost all players, and the few lucky enough to show a profit have to pay taxes. The government is already taxing the income of the casinos, so that should be enough.

    One should only pay gambling taxes out of legal obligation to do so -- not a moral belief that they are just and fair.
    Check out my poker forum, and weekly internet radio show at http://pokerfraudalert.com

  5. #5
    The biggest reason why gambling taxes are unfair is the way they are figured on your tax return.

    Even if you have a net loss, any gambling win will raise your adjusted gross income and when that happens it has the effect of lowering the value of other deductions and raising your overall tax rate. Unfortunately the losses incurred in gambling are not considered part of your adjusted gross income.

    Gambling income is income and I think it can be taxed. But I think it should be taxed fairly and that means it should be treated as a one-line item.

  6. #6
    There was an IRS case several years ago about a Southern California poker player. The guy was reportedly pulling low six figures a year out of the poker rooms there. The IRS wanted to know how he was making mortgage payments and other bills to the tune of more than $100,000 a year when his declared income was just $20,000 a year. He was convicted of income tax evasion. The IRS "proved lifestyle" on him in order to get the conviction.

    If Singer truly won as he said then how was he able to write off all of his win without leaving evidence of lifestyle? The only way he could have done it is by hiding behind his wife's income. Professional gamblers do not get special write offs that other businesses don't get. If all business owners did their taxes the way Rob says he did then there wouldn't be any money in the federal treasury.

    In an interview the late Puggy Pearson told how Benny Binion taught him and other poker players how to declare income, pay the FICA and income taxes, so they could invest their money....and protect themselves from the IRS proving lifestyle on them. As Moss said "money in a shoe box isn't worth anything."

    There was a court case in 1986, Baxter vs. The United States. Until then gambling winnings were considered unearned income and taxed at the rate of 70%, where earned income was taxed at the rate of just 50%. This was a difference of about $180,000 a year to poker player, Billy Baxter. So he sued and won. The judge said something like "if the IRS thinks Baxter had just gotten lucky at poker then why don't they sit down and play with him?" This changed everything for professional gamblers. They were then considered a business.

    The IRS appealed to the Ninth Circuit and lost again. All professional gamblers owe Baxter a thank you.

  7. #7
    Isn't this interesting? No one answered YES. Now can you see why tax returns can't be used to determine who is the better gambler and who has a winning method or strategy?

  8. #8
    Originally Posted by Alan Mendelson View Post
    No one answered YES.
    Maybe no one answered yes because you added the ridiculous qualifier "because winners want to show the world they really won".

    There are, of course, several reasons why a winner would voluntarily pay taxes on the win.

    I doubt "to show the world they really won" would be one of them.

    I mean, come on...what gambling winner would be so insecure as to show the world their tax returns, just to prove that they won?

  9. #9
    Isn't that what our challenge here with Singer was all about?

  10. #10
    Originally Posted by Alan Mendelson View Post
    Isn't that what our challenge here with Singer was all about?
    Did Singer show his returns?

    Do you suppose that anyone, even Rob Singer, would intentionally under-report his losses and voluntarily pay taxes on wins in 2006, in anticipation of using the returns to prove that he won...10 years later?

  11. #11
    The answers were poorly written, loaded, I say.

  12. #12
    Originally Posted by RS__ View Post
    The answers were poorly written, loaded, I say.
    Exactly.

  13. #13
    I concede: the answers were not crafted for a Gallup poll.

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