Signer issue..

[Irish Boy]

Originally Posted by traynor

Perhaps in what George H. W. Bush called a "kinder, gentler world" such might be so. Not in this one. Like many other areas, serious wagering is what it is. And--like many other areas--it is possible to do well by simply accepting things as they are in reality (rather than how we would like them to be), and continually seeking ways to leverage what advantages exist.

You might consider consulting with your attorney about setting up an LLC just for wagering activities.

It's not going to do what you think it's going to do. In fact, it's probably going to set off a big red flag for the IRS.

[thaskalos]

Originally Posted by Irish Boy

Yes.

What's the charge? Encouraging criminal behavior?

[WP1981]

I was able to cash it at Del Mar without much fuss. May be a good idea to go down to the SS office and get a copy. Not planning on driving two hours down the 5 to cash a ticket every time.

[AndyC]

Originally Posted by traynor

Not necessarily. They tend to keep specific activities specific, rather than muddled in a heap with "all income from all sources." It makes it a LOT simpler to document ups and downs in that specific activity (with the advantages that may result).

All good in theory but I have found that people who tend to be bad record keepers will always be bad record keepers regardless of their intentions or circumstances.

An LLC in CA can be an expensive way to keep your records in one place. There is both an $800 minimum tax and a gross receipts tax to factor in. Other states are much more friendly to LLCs. LLCs organized in other states but do business in CA are subject to the CA rules.

[traynor]

Originally Posted by Irish Boy

It's not going to do what you think it's going to do. In fact, it's probably going to set off a big red flag for the IRS.

On the contrary, it does exactly what I intend it to do--clearly establish that wagering is an enterprise engaged in for financial reward, just like any other type of business. And I have a very good relationship with the IRS. I keep detailed records, I don't cheat or chisel, and the rewards (and benefits) are substantial.

[Track Collector]

Originally Posted by traynor

On the contrary, it does exactly what I intend it to do--clearly establish that wagering is an enterprise engaged in for financial reward, just like any other type of business. And I have a very good relationship with the IRS. I keep detailed records, I don't cheat or chisel, and the rewards (and benefits) are substantial.

Exactly!

In response to AndyC's response, it has nothing to do with just trying to have a place to capture all your records, and everything to do with whether the government sees your wagering activity as that of a "hobbyist" vs. that of a "professional" or business.

The IRS requires that ALL wagering activities be reported. If you wager significant money and are classified as a "hobbyist", your tax liabilities will undoubtedly be much higher, bordering on insane/illogical, vs. those who can meet the high hurdles required be considered "professional". An LLC (which is set up solely for the "business" of one's wagering activities) makes it very difficult to argue for the "hobbyist" position and against the "professional" status. Thus a player gets to account for all the wagering activities on schedule "C", which includes taking advantage of racing-related expenses to off-set taxable racing income. It is also possible to achieve "professional" status without the use of an LLC, but it makes life a bit harder.

And like traynor, I completely agree that one should keep detailed records and report all income.

[Irish Boy]

Originally Posted by traynor

On the contrary, it does exactly what I intend it to do--clearly establish that wagering is an enterprise engaged in for financial reward, just like any other type of business. And I have a very good relationship with the IRS. I keep detailed records, I don't cheat or chisel, and the rewards (and benefits) are substantial.

Its fine as long as you are using it for the reasons you describe, which are entirely legitimate. For many people it is a (clumsy) shielding device.

[Irish Boy]

Originally Posted by thaskalos

What's the charge? Encouraging criminal behavior?

Aiding or abetting tax fraud, or conspiracy to commit tax fraud.

[traynor]

Originally Posted by Track Collector

Exactly!

In response to AndyC's response, it has nothing to do with just trying to have a place to capture all your records, and everything to do with whether the government sees your wagering activity as that of a "hobbyist" vs. that of a "professional" or business.

The IRS requires that ALL wagering activities be reported. If you wager significant money and are classified as a "hobbyist", your tax liabilities will undoubtedly be much higher, bordering on insane/illogical, vs. those who can meet the high hurdles required be considered "professional". An LLC (which is set up solely for the "business" of one's wagering activities) makes it very difficult to argue for the "hobbyist" position and against the "professional" status. Thus a player gets to account for all the wagering activities on schedule "C", which includes taking advantage of racing-related expenses to off-set taxable racing income. It is also possible to achieve "professional" status without the use of an LLC, but it makes life a bit harder.

And like traynor, I completely agree that one should keep detailed records and report all income.

It may be difficult to understand for those who believe that squatting on the same piece of dirt for one's entire life is somehow desirable, but I REALLY like to travel and stay (for periods of time) in various strange and new places. In my "previous occupation" as a contract software developer, I had ample opportunity to learn (and understand) the advantages of business-related travel expenses, as opposed to expendable-income travel expenses.

Wagering allows me to conduct income-generating activities in a variety of highly desirable locations--from Australian casinos to Sha Tin--with the considerable tax advantage of deducting legitimate business expenses while doing so.

If one is losing, or only winning trivial amounts, it doesn't matter much. If one is winning non-trivial amounts, the advantages should be apparent.

[traynor]

Originally Posted by Irish Boy

Aiding or abetting tax fraud, or conspiracy to commit tax fraud.

That is something best avoided, and rightly so. Just as discussions of illegal wagering activities conducted "under the radar" can come back to bite, so can discussions of ways to evade payment of taxes.

[Spiderman]

Originally Posted by AndyC

All good in theory but I have found that people who tend to be bad record keepers will always be bad record keepers regardless of their intentions or circumstances.

An LLC in CA can be an expensive way to keep your records in one place. There is both an $800 minimum tax and a gross receipts tax to factor in. Other states are much more friendly to LLCs. LLCs organized in other states but do business in CA are subject to the CA rules.

An LLC or incorporation may only be beneficial with a minimum gross income of $150,000. Also, there will be self-employment tax aside from gross receipts.

[AndyC]

Originally Posted by Track Collector

Exactly!

In response to AndyC's response, it has nothing to do with just trying to have a place to capture all your records, and everything to do with whether the government sees your wagering activity as that of a "hobbyist" vs. that of a "professional" or business.

The IRS requires that ALL wagering activities be reported. If you wager significant money and are classified as a "hobbyist", your tax liabilities will undoubtedly be much higher, bordering on insane/illogical, vs. those who can meet the high hurdles required be considered "professional". An LLC (which is set up solely for the "business" of one's wagering activities) makes it very difficult to argue for the "hobbyist" position and against the "professional" status. Thus a player gets to account for all the wagering activities on schedule "C", which includes taking advantage of racing-related expenses to off-set taxable racing income. It is also possible to achieve "professional" status without the use of an LLC, but it makes life a bit harder.

And like traynor, I completely agree that one should keep detailed records and report all income.

As a CPA specializing in tax, I know the issues regarding gambling and taxes. Most people using an LLC would presumably file their taxes as a disregarded entity showing all of their activity on a Schedule C. As such, they would face the same scrutiny as a non-LLC bettor who also files on a Schedule C. So what it really boils down to is how you handle your gambling activities. Using an LLC may put a check mark in your column for intent but in the end substance is more important than form.

[BlueShoe]

Originally Posted by WP1981

Hit a race yesterday for around $2k. I go back to Los Al to cash it today and they won't do it because I don't have my ss card.

You must have gone to the window of the same woman in the Los Al clubhouse I did when I hit a Pick-5 for $2200. First thing she said to me after scanning my ticket was show me your SS card.

Have not seen this mentioned yet, but if you are over 65 and do not carry your SS card for supposed safety reasons, you still are zinged. Your SS number is on your medicare card. The senior advocacy groups have tried to eliminate this, but the last I heard, to no avail. A suggestion is make a copy of your medicare card with a strip of tape over the number blanking it out, carrying that, and leaving your SS card at home. Which brings us back to square one; Id'ing oneself when hitting a signer.

[traynor]

Originally Posted by AndyC

As a CPA specializing in tax, I know the issues regarding gambling and taxes. Most people using an LLC would presumably file their taxes as a disregarded entity showing all of their activity on a Schedule C. As such, they would face the same scrutiny as a non-LLC bettor who also files on a Schedule C. So what it really boils down to is how you handle your gambling activities. Using an LLC may put a check mark in your column for intent but in the end substance is more important than form.

I think if a person has to worry about being scrutinized by the IRS, something is fundamentally wrong with that person's income-generating activiites. The typical thing "wrong" is that the person is not earning enough income to pay the appropriate taxes on that income. In that event, one is well-advised to spend more time and effort on improving one's earning ability and less on scheming and conniving ways to avoid paying the appropriate taxes. "Entrepreneurs" in particular seem to have a difficult time in that area.

If one's business--especially if that business is wagering--does not generate enough income to pay the appropriate taxes on that income, perhaps one is not doing as well as he or she pretends (or claims) to be doing, and should consider getting a real job.

[thaskalos]

Originally Posted by traynor

I think if a person has to worry about being scrutinized by the IRS, something is fundamentally wrong with that person's income-generating activiites. The typical thing "wrong" is that the person is not earning enough income to pay the appropriate taxes on that income. In that event, one is well-advised to spend more time and effort on improving one's earning ability and less on scheming and conniving ways to avoid paying the appropriate taxes. "Entrepreneurs" in particular seem to have a difficult time in that area.

If one's business--especially if that business is wagering--does not generate enough income to pay the appropriate taxes on that income, perhaps one is not doing as well as he or she pretends (or claims) to be doing, and should consider getting a real job.

The horseplayers are married, Traynor...and they sometimes keep certain details of their horseplaying a secret from their wives...lest their hobby be misinterpreted as an "addiction". They hesitate to declare their losses on their tax returns, not because they want to avoid paying their taxes (there seldom is any tax to pay anyway)...but because they want to keep the peace at home.

Where did you acquire the impression that there are that many horse racing "entrepreneurs" around?