1099-misc for the NHC

pointman · #1 02-10-2015, 03:40 PM

You can't fault Monmouth for this, this is a fact of life. You won a free trip, airfare and hotel. Anytime anyone wins a prize it is income and taxable. It is one of the certainties of life.

Scav · #2 02-10-2015, 03:58 PM

Quote:

Originally Posted by pointman

You can't fault Monmouth for this, this is a fact of life. You won a free trip, airfare and hotel. Anytime anyone wins a prize it is income and taxable. It is one of the certainties of life.

If you are able to prove you are professional gambler, then you can write off expenses towards it but that is a really hard nut to crack.

1099 are brutal if you are not self employed.

Can someone that was in the NHC comment if they got a 1099 for actually qualifying for it. If so, for those guys that get into every tourney, they must have a nightmare of a time regarding the 1099, unless they are claiming they are a professional gambler. I'm wondering if yours was just for the trip expense.

billr21 · #3 02-10-2015, 04:02 PM

I guess I was expecting an $800 1099 for trip and room cost but the seat was $3333 which was a surprise to me.

pointman · #4 02-10-2015, 04:21 PM

Quote:

Originally Posted by Scav

If you are able to prove you are professional gambler, then you can write off expenses towards it but that is a really hard nut to crack.

1099 are brutal if you are not self employed.

Can someone that was in the NHC comment if they got a 1099 for actually qualifying for it. If so, for those guys that get into every tourney, they must have a nightmare of a time regarding the 1099, unless they are claiming they are a professional gambler. I'm wondering if yours was just for the trip expense.

I have not received anything yet, but I am expecting to receive a 1099.

jms62 · #5 02-10-2015, 05:06 PM

Cant you write it off vs any out of pocket you used in qualyifying or any out of pocket used on the trip?

billr21 · #6 02-10-2015, 06:31 PM

I went thru the possible offsets and none applied for a 1099-misc income statement. the thing is I went twice before and never received any 1099s. so I got off scott free before and didn't know it. bill

OTM Al · #7 02-10-2015, 06:53 PM

That's crazy. I can't believe Monmouth put the seat charge on you. That is the money as a tournament sponsor they pay into the prize pool. If you "won" this amount, then you also lost the same amount when you didn't cash. Had you cashed, you would be paying for your winnings twice at this amount. This is not right.

Scav · #8 02-10-2015, 07:54 PM

Quote:

Originally Posted by jms62

Cant you write it off vs any out of pocket you used in qualyifying or any out of pocket used on the trip?

It really depends on how you file. If you are self employed, you are probably itemizing so while being careful, there is alot more you can 'play' with but the killer is when you get a 1099 and are taking a standard deduction. Absolutely nothing you can do.

It would almost be better off that they give you a w2-g instead because of the ability to write off anything up until your winnings.

And honestly, I'm surprised someone hasn't contested it, that the room and board is 1099 and the prize winning is a w2G. I have to think someone alot smarter then me has already looked into it. That being said, I think w2G only happens at certain thresholds for the type of gambling you are doing.

I also wonder if people will start requesting that they take 25% out to cover them, because someone that hit large at one of these things could be in some deep trouble if they didn't plan properly.

Just thinking this through, and I would consult a CPA on this just to make sure, but if you are going to play in contests on a full time basis, I would consider maybe starting an LLC where you can file a schedule C. On this scenario, you could really protect yourself from something like this. Imagine you get in 100 $500 tourneys in the year (500,000 'invested) and you finished last in 499 of them, yet in one of them, you win 475,000. Without some protection of this, you would get a 1099 for 475k and be on the hook for whatever % that would be, prob between 25 and 33%. Under the LLC scenario, it would be only operate on a loss for that year.

The issue would be having to show a profit twice out of 7 years, and also things like this are HEAVILY scrutinized by our lovable friends.

For the record, just thinking out loud of scenarios from some of the stuff I learned a while back, I might be completely and utterly wrong about the LLC idea.

Maybe Steve can get Beychok or someone on and ask them how they handle all these 1099's. Hell, Pweizer, what do you do with your 1099's, how do you handle them? (He plays in a ton of these tourneys)

billr21 · #9 02-10-2015, 08:06 PM

Appreciate the feedback on this, i'll be getting back to the Monmouth folks in a day or so. bottom line is the seat cost shouldn't be part of my "winnings" . Will let you know how I make out. bill

VOL JACK · #10 02-10-2015, 07:26 PM

Quote:

Originally Posted by pointman

You can't fault Monmouth for this, this is a fact of life. You won a free trip, airfare and hotel. Anytime anyone wins a prize it is income and taxable. It is one of the certainties of life.

You are obviously not a contest player.

OTM Al · #11 02-10-2015, 07:42 PM

Just talked to the wife who has run these tournaments and she says this is completely wrong. The air and hotel is one thing, though her winners never paid tax on these either, but tax on the seat is outrageous and completely wrong. You need to contact Monmouth about this and if they don't respond, write to the NHC people about this.

pointman · #12 02-10-2015, 07:50 PM

Quote:

Originally Posted by VOL JACK

You are obviously not a contest player.

I have no idea what you mean by that.

What I am though is a lawyer, albeit not a tax attorney. But I remember, as almost anyone who went to law school does, the first case they taught us in tax class in our first year. The case was from the early 1900's where an executive got his company to agree to pay his personal taxes in addition to his salary. The Court, I believe the US Supreme Court, held that all the money he was paid was income and he was personally liable to pay not only his taxes on his salary, but also the money his company paid for his taxes.

The bottom line is that I don't believe this is an issue for Monmouth as they do not make up the rules for what is income and what is taxable, Congress does. When you win a prize in general (such as on a game show or a free trip) it is considered taxable income. The issue is more likely one for your accountant, not Monmouth race track.

VOL JACK · #13 02-10-2015, 08:04 PM

Quote:

Originally Posted by pointman

I have no idea what you mean by that.

What I am though is a lawyer, albeit not a tax attorney. But I remember, as almost anyone who went to law school does, the first case they taught us in tax class in our first year. The case was from the early 1900's where an executive got his company to agree to pay his personal taxes in addition to his salary. The Court, I believe the US Supreme Court, held that all the money he was paid was income and he was personally liable to pay not only his taxes on his salary, but also the money his company paid for his taxes.

The bottom line is that I don't believe this is an issue for Monmouth as they do not make up the rules for what is income and what is taxable, Congress does. When you win a prize in general (such as on a game show or a free trip) it is considered taxable income. The issue is more likely one for your accountant, not Monmouth race track.

I meant that, I play in quite a few contests (although not nearly as many as Paul) I have never heard of a track doing this, it is a pretty low blow.
You think anyone would pay $$ to enter their contest had they known this upfront?

Scav · #14 02-10-2015, 08:06 PM

Quote:

Originally Posted by VOL JACK

I meant that, I play in quite a few contests (although not nearly as many as Paul) I have never heard of a track doing this, it is a pretty low blow.
You think anyone would pay $$ to enter their contest had they known this upfront?

So Jack, you only get 1099's if you 'win' flight,room, etc?

NTamm1215 · #15 02-10-2015, 08:12 PM

This is completely unheard of to me and almost seems like it had to be a mistake. I received 1099s for prize money in 2014 and have in the past. Both of the sites where I qualified last year sent 1099s with travel included. That is the standard procedure.

If Monmouth was touting how they give out more NHC spots than any other racetrack (which they did at the NHC) and they are actually passing through the cost to the players, then that's pretty wretched.

VOL JACK · #16 02-10-2015, 08:13 PM

Quote:

Originally Posted by Scav

So Jack, you only get 1099's if you 'win' flight,room, etc?

yes

Scav · #17 02-10-2015, 08:16 PM

Quote:

Originally Posted by VOL JACK

yes

Wow...There must be some kind of loophole somewhere because in theory, all prize winnings are taxable. Wonder if tourneys keep growing if our lovable friends will go for the money grab regarding it.

(its probably related to same theory that where if you go to the track or casino, you are suppose to report EVERY SINGLE ticket or hand you win as income)

pointman · #18 02-10-2015, 08:14 PM

Quote:

Originally Posted by VOL JACK

I meant that, I play in quite a few contests (although not nearly as many as Paul) I have never heard of a track doing this, it is a pretty low blow.
You think anyone would pay $$ to enter their contest had they known this upfront?

I understand where you are coming from, and I could be wrong, but my instinct tells me that it has nothing to do with Monmouth and everything to do with the IRS.

The IRS definition of income is all money, goods, property and services you receive from any source derived. In basic terms, anything you receive is taxable unless the tax code specifically exempts it. If you go on The Price is Right and you win a car, you have to report the value of the car as income and pay taxes on the value. It is why Richard Hatch, the first winner of Survivor, went to jail for failing to report his winnings.

Again, I am not an expert in the area. But I do know that anything you receive is income unless the tax code specifically says it is exempt or deductible. I am sure there is a CPA around here who knows better, but my instinct says that winning a trip to the NHC is something that you need to discuss with your accountant as there may be tax consequences.

Scav · #19 02-10-2015, 08:19 PM

Quote:

Originally Posted by pointman

I understand where you are coming from, and I could be wrong, but my instinct tells me that it has nothing to do with Monmouth and everything to do with the IRS.

The IRS definition of income is all money, goods, property and services you receive from any source derived. In basic terms, anything you receive is taxable unless the tax code specifically exempts it. If you go on The Price is Right and you win a car, you have to report the value of the car as income and pay taxes on the value. It is why Richard Hatch, the first winner of Survivor, went to jail for failing to report his winnings.

Again, I am not an expert in the area. But I do know that anything you receive is income unless the tax code specifically says it is exempt or deductible. I am sure there is a CPA around here who knows better, but my instinct says that winning a trip to the NHC is something that you need to discuss with your accountant as there may be tax consequences.

What is probably happening is that some of the people might be voluntarily reporting it as gambling income and then just writing it off as gambling loss. I guess if I were to get into a tourney and lose, I would consider that a gambling loss on my taxes. When you do your taxes, there is an area for 'unreported gambling winnings' but I think you can only write off what is reported on W2G's but I could be wrong.

But I agree with you with what you are saying on taxable income.

OTM Al · #20 02-10-2015, 08:27 PM

Quote:

Originally Posted by pointman

I understand where you are coming from, and I could be wrong, but my instinct tells me that it has nothing to do with Monmouth and everything to do with the IRS.

The IRS definition of income is all money, goods, property and services you receive from any source derived. In basic terms, anything you receive is taxable unless the tax code specifically exempts it. If you go on The Price is Right and you win a car, you have to report the value of the car as income and pay taxes on the value. It is why Richard Hatch, the first winner of Survivor, went to jail for failing to report his winnings.

Again, I am not an expert in the area. But I do know that anything you receive is income unless the tax code specifically says it is exempt or deductible. I am sure there is a CPA around here who knows better, but my instinct says that winning a trip to the NHC is something that you need to discuss with your accountant as there may be tax consequences.

The seat cannot be taxable. You cannot buy in, so it has no monetary value. The $3k is the prize money contribution by the satellite contest. If that is taxed, then all taxes have already been paid on all the prize money, so no one cashing at the NHC should have to pay taxes. Does that sound remotely right to anyone? Big no right there.