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tax question in poker regarding big MTTs

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traxamillion   United States. Jun 06 2017 06:43. Posts 10217

so doug just won the one drop for like 3.7 million. has 43% of himself supposedly (not rly relevant). As a US citizen he will be taxed almost 50%. like 40-50%. So he takes home about half the cash he won. still a nice score but how do you work this tax factor into your profitability equations? Is tax one of the reasons most of the high roller grinders are euros in tax exempt places?

say doug has a 15% roi in this field. How does tax not make it -ev to play this? No matter the score in a MTT this size even a mincash will be taxed heavily therefore all of the payouts are almost halved but you still pay full price to enter.

Clever accounting necessary?

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HungarianGOD   . Jun 06 2017 16:34. Posts 404

You can deduct gambling losses for the year, up to the amount of gambling winnings for the same year. So now he can brick $3.7M worth of bullets, and then have to pay no tax!
lol

 Last edit: 06/06/2017 16:35

NMcNasty    United States. Jun 06 2017 18:37. Posts 1780

Yeah this specific tourney for specifically doug, is probably after tax +EV, since if he had lost he can deduct tourney buyins from the tax he pays on overall winnings for the year which presumably covers the buyin (though not entirely sure I think I read in another thread that he's been running bad in cash games for a while). That he sold off most of himself actually is somewhat relevant since if he only won ~50k for the year his winnings cover his deduction.

Other higher buyin super high roller events are just insanely stupid to play IMO. Few people in a 300k-1M buyin event have their buyin covered by winnings. I really think its a case of top pros just wanting the stroke their own egos by playing in the biggest events, I seriously doubt anyone sat down and tried to legitimately calculate what their after-tax ROI is.

 Last edit: 06/06/2017 18:37

Defrag   Poland. Jun 06 2017 18:48. Posts 4421

Relevant, check this out:
Players from November Nine, final table of WSOP 2016 to pay over $10,000,000 in taxes


traxamillion   United States. Jun 07 2017 01:01. Posts 10217

Thanks guys so I understand deductions play a large part. However in the case of a big score like doug's your winnings will far exceed provable losses for the year. You will pay a huge % tax if you win or possibly even cash. Is the fact a non-cash can be deducted on other winnings counter this? I would think not.

You are only going to win 50-60% of the advertised prize just seems like your roi has to be massive in this case even if losses can be deducted. The deductions don't even seem to play a direct role in figuring needed roi because there is no deduction if you cash.

What am I missing?


NMcNasty    United States. Jun 07 2017 06:29. Posts 1780

Your just confusing the more general shittiness of having to pay taxes with the specific-to-poker shittiness of not being able to carry over losses from year to year. Example:

Poker player Cashgamer makes 200k over the course of two years, 100k each year. If the tax rate is 40%, he pays 40k each year in taxes for a total of 80k. I mean that sucks, but it's not really any different for a dentist making 100k a year.

Poker player TourneyDonk also makes 200k over two years but its 400k in winnings one year and 200k in losses the next. The year he loses, he doesn't pay taxes but he also doesn't gain anything. But the year he wins, he pays 160k in taxes, meaning he's paying twice as much as cashgamer. His overall after-tax salary is just 20k a year which is basically McDonalds.

The above doesn't even count the effects of tax brackets which make it even worse for TourneyDonk.


Spitfiree   Bulgaria. Jun 09 2017 22:57. Posts 7644

Step 1. Win tournament
Step2. Come to Bulgaria and pay 25k euros for citizenship
Step3. Dont pay a single dollar in tax
...
Step4....
Step5 profit?


Blitzkrieg0   United States. Jun 11 2017 02:00. Posts 25


  On June 07 2017 05:29 NMcNasty wrote:
Your just confusing the more general shittiness of having to pay taxes with the specific-to-poker shittiness of not being able to carry over losses from year to year. Example:

Poker player Cashgamer makes 200k over the course of two years, 100k each year. If the tax rate is 40%, he pays 40k each year in taxes for a total of 80k. I mean that sucks, but it's not really any different for a dentist making 100k a year.

Poker player TourneyDonk also makes 200k over two years but its 400k in winnings one year and 200k in losses the next. The year he loses, he doesn't pay taxes but he also doesn't gain anything. But the year he wins, he pays 160k in taxes, meaning he's paying twice as much as cashgamer. His overall after-tax salary is just 20k a year which is basically McDonalds.

The above doesn't even count the effects of tax brackets which make it even worse for TourneyDonk.



Can't you just carry the loss forward as a net operating loss? There's got to be some loop hole to actually do that, although it doesn't work if he wins in year one and loses in year two anyways. He'd have to win in year 3 to do anything with the losses.

 Last edit: 11/06/2017 02:02

NMcNasty    United States. Jun 14 2017 06:42. Posts 1780

^ I'm not a tax lawyer so can't say anything definitively, but from what I remember speaking with tax people and from some casual googling the answer is still no, a pro can't carry over losses as a NOL. I did see a 2+2 post saying otherwise though, so not 100% on that.


NMcNasty    United States. Jun 14 2017 06:51. Posts 1780


  On June 09 2017 21:57 Spitfiree wrote:
Step 1. Win tournament
Step2. Come to Bulgaria and pay 25k euros for citizenship
Step3. Dont pay a single dollar in tax
...
Step4....
Step5 profit?



One problem, at least for Americans, is even if you gain citizenship and live in another country you still have to pay a ton of us income tax if you have dual citizenship. You have to renounce your us citizenship entirely to pay no tax.

Very tempted at the moment though


Spitfiree   Bulgaria. Jun 14 2017 21:01. Posts 7644

I'd still do it and just get a lifetime work & travel VISA for the US especially if its the WSOP ME win, probably the only country in the civilized world that still requires visas from us ... so dumb.

then again if something happens to you anywhere around the world there is about 0% chance the Bulgarian embassy will do shit :D we had about 10 medics in Libya for more than 10 years being falsely accused of injecting HIV into children and were physically abused on a daily basis, they didn't do shit, nor did the embassy, it was because of the EU that they were released in the end

 Last edit: 14/06/2017 21:04

 





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