Is this Hyperbole or not? (1 Viewer)

[doctorchips]

Meanwhile… I read somewhere that as many as 85%-95% of all poker players are losers in the long run, if their games are raked.

And it’s even worse among slot/table game players.

No one wants to talk about that… It’s awkward. (Part of the reason I favor home games.)

Nobody is mentioning that here because it's not really relevant to this tax.

This tax lets losers lose, break even players lose, and winners win less.

It just seems to be a sin tax.

 

[Taghkanic]

After reading through a zillion TwoPlusTwo threads and various other websites without getting any clarity, I finally caved and asked... ChatGPT.

Note: IANAL, nor a tax accountant, and neither is ChatGPT. This is a summary it generated from a much longer Q&A.

--------------------

Structuring Poker Income for Taxes: A Practical Guide (2025 Update)​

New Law: 90% Gambling Loss Deduction Cap​

What’s Changed:​

• A revised U.S. tax code now limits gambling loss deductions to 90% of losses.
  • If you win $250,000 and lose $240,000,
  • You can only deduct $216,000 (90% of $240K),
  • And must pay tax on $34,000, even though your net profit was only $10,000.

Applies To:​

• Likely all individuals, recreational or professional.
• Applies whether or not you itemize.
• Unclear whether it applies to incorporated entities (LLC/S-Corp)—but it likely does not.

Strategic Implication:​

• Filing as a business (LLC/S-Corp) may allow full deduction of losses, bypassing this cap.

---

Incorporating as a Poker Player (LLC or S-Corp)​

Why Consider It:​

• Reduce self-employment tax through salary/distribution split (S-Corp only).
  • Travel, coaching, solvers, health insurance, study tools
• Increased audit protection and credibility.

S-Corp vs. Schedule C:​

Feature	Schedule C (Sole Prop)	S-Corp
SE Tax on all net profit	Yes	No (only on salary)
Expense deductions	Yes	Yes
IRS audit risk	Higher	Lower (cleaner structure)
Requires payroll setup	No	Yes (reasonable salary)
Extra filing complexity	Simple	More complex

---

Tournament Winnings vs Cash Game Income​

Tournament Winnings:​

• Casinos issue W-2G or 1099 with your personal SSN.
• IRS already knows you received this income.
  • Report it as personal income
  • Avoid trying to reclassify it through your S-Corp unless the venue pre-registered your business

Cleanest play: Claim tournament winnings personally, deduct personal expenses on Schedule A or C

---

Cash Game Winnings:​

• No formal IRS reporting (no W-2G or 1099)
• You are responsible for self-reporting
• These can be routed through an S-Corp or LLC, logged as business income

Cleanest play: Record session logs (date, time, location, net win/loss), deposit to S-Corp, deduct real expenses

---

Common IRS Pitfalls & Best Practices​

Action	Risk Level	Notes
Depositing a W-2G tournament check to S-Corp	High	Mismatch between IRS report (personal) and deposit (business)
Depositing cash winnings to S-Corp	Moderate	Okay if logged and reported accurately
Endorsing a personal check to your S-Corp	Risky	Creates audit flags unless IRS sees entity as proper payee
Using hybrid system (personal + S-Corp)	Clean	Standard among pros. Track sources and file accordingly

---

Summary Recommendations​

1. Keep Tournament Income and S-Corp separate unless you pre-arrange reporting via EIN.
2. Use your S-Corp for cash games, staking, coaching, content, and tools.
   • Date, location, game type, time in/out, net result
3. Consult a poker-savvy CPA to set up correct reporting flow.
4. Watch for IRS guidance on whether the 90% loss deduction limit applies to entities—for now, assume it may not.

 

[Taghkanic]

I had asked ChatGPT about means for getting tournament winnings into an SCorp, considering that when registering for a tournament it is usually under your own name —and you get paid out as such. It strongly advised against taking a casino check paid to you personally and signing it over/depositing it in your SCorp. It claimed that this is a big red flag for the IRS — “audit bait” it also called it.

So I then questioned it about how to get tournament winnings into your SCorp, and it said that sometimes big tourney operators like WSOP and WPT will cut their checks to your LLC *if you arrange for it in advance*. Here is that part of our chat.

---

Use a "DBA" or EIN with a Reputable Series (Advanced Setup)​

If you're working with:

• WSOP
• WPT
• Wynn/ARIA High Rollers
• Private games or staking setups

You can pre-register your business and submit your S-Corp EIN and W-9 info. They may be able to:

• Pay your LLC/S-Corp directly
• Issue a 1099 or W-2G to the S-Corp EIN

BUT:

• This depends on venue policy
• May require prior coordination and sometimes a player agreement

So don’t count on it unless you’ve already cleared it with their cage or accounting department.

---------

NOTE: I find it highly unlikely that a private game would cut checks to an LLC but you never know.

 

[HiveKueen]

So…it remains to be seen if this law change does damage to poker or not.

 

[upNdown]

People should check out Phil Galfond Twitter feed. He’s got some real data from pros and recs. I’d take his word as next to gospel on something like this.

 

[Taghkanic]

People should check out Phil Galfond Twitter feed. He’s got some real data from pros and recs. I’d take his word as next to gospel on something like this.

Normally I’d agree but he kind of went way overboard in his initial posts about this. So I guess even god makes mistakes.

Also I noticed in a recent video with his spreadsheet, he studied a pool of players who were more than 80% winners — when the actual overall pool are more like 85-95% losers.

As Galfond concludes, even among his group of winners the average dent on their actual income is maybe 4%. He admits that the main harm is to “high volume low ROI Triton players.”

Gonna be hard ginning up sympathy for that crowd.

 

[Taghkanic]

Nobody is mentioning that here because it's not really relevant to this tax.

This tax lets losers lose, break even players lose, and winners win less.

It just seems to be a sin tax.

It’s relevant because the tax, described as catastrophic for poker, will probably not impact even 1% of poker players.

And those impacted—per Galfond—will likely see a typical loss of maybe 4% if their income.

Can’t sustain a 4% dip? You might be in the wrong profession. Or maybe not be as professional a player as you thought.

I just can’t make my mind up about which is dumber: The tax itself, or the exaggerated hysteria over it.

 

[LotsOfChips]

I just can’t make my mind up about which is dumber: The tax itself, or the exaggerated hysteria over it.

 

[WedgeRock]

Is this Hyperbole or not?

The article quotes a CPA who says,

This change could discourage casual gamblers — especially tourists — who come to places like Vegas or Atlantic City for a weekend of entertainment. If they know they can’t fully deduct their losses, they might gamble less, or not at all.

What tourist is going to Vegas and not planning on gambling? Okay, maybe to see a sporting event, but most people go to Vegas to specifically gamble. No one is going to Vegas, then consulting their tax advisor before they decide to enter a poker tournament.

Maybe not hyperbole, but certainly overstated. At least for the casual/rec gambler.

Also, right now, you can carry over losses. If you win $10,000 but have $12,000 in losses, you can only deduct $10,000 but the other $2,000 can be carried over to the next year. So in year 2, if you win $10,000 and have no losses, you can write off the $2,000 carryover. Anyone know if under the new bill, the 10% over the cap can be carried over? If so, this will have a less significant impact.

 

[Taghkanic]

The article quotes a CPA who says,



What tourist is going to Vegas and not planning on gambling? Okay, maybe to see a sporting event, but most people go to Vegas to specifically gamble. No one is going to Vegas, then consulting their tax advisor before they decide to enter a poker tournament.

Maybe not hyperbole, but certainly overstated. At least for the casual/rec gambler.

Also, right now, you can carry over losses. If you win $10,000 but have $12,000 in losses, you can only deduct $10,000 but the other $2,000 can be carried over to the next year. So in year 2, if you win $10,000 and have no losses, you can write off the $2,000 carryover. Anyone know if under the new bill, the 10% over the cap can be carried over? If so, this will have a less significant impact.

I don’t know that you could carry gambling losses over to a future year as it stood, before the new bill. I thought that ended a long time ago. This article appears to suggest that was ended by a court case in …. 1951:

https://www.journalofaccountancy.com/issues/2018/oct/pro-gambling-net-losses/

 

[doctorchips]

It’s relevant because the tax, described as catastrophic for poker, will probably not impact even 1% of poker players.<<<<

And those impacted—per Galfond—will likely see a typical loss of maybe 4% if their income. <<<<

Can’t sustain a 4% dip? You might be in the wrong profession. Or maybe not be as professional a player as you thought.

You are essentially saying "most people lose at poker and gambling, therefore it won't impact most people anyway" which maybe is true, but it's still going to dissuade people who are close to break even or trying to have some slight 5% edge.

Why not just invent a new tax on 5% 'magic' inventory for all businesses in the US and make them pay tax on that non-existent inventory? It's never product they had or sold, but fuck it who can't sustain a 5% loss on their income right? It's the same principle here.

I think there's so much politicizing this recent bill that there isn't really an honest appraisal going on here. People come out against it and the answer is "who can't sustain a 4% drop in income" from people that probably are "small government" and suddenly are completely fine with something like this for no apparent reason.

 

[Taghkanic]

You are essentially saying "most people lose at poker and gambling, therefore it won't impact most people anyway" which maybe is true, but it's still going to dissuade people who are close to break even or trying to have some slight 5% edge.

Why not just invent a new tax on 5% 'magic' inventory for all businesses in the US and make them pay tax on that non-existent inventory? It's never product they had or sold, but fuck it who can't sustain a 5% loss on their income right? It's the same principle here.

I think there's so much politicizing this recent bill that there isn't really an honest appraisal going on here. People come out against it and the answer is "who can't sustain a 4% drop in income" from people that probably are "small government" and suddenly are completely fine with something like this for no apparent reason.

I never said it’s a good law. I just think it’s silly to fret over a few hundred marginally profitable high-volume staked pros with barely professional levels of success having to pay a slightly higher rate. The Chicken Little reactions are just that.

And on top of everything, 99.8% of poker players, winners or losers, AFAIK never report anything unless and until they win big enough for the IRS to potentially notice. I know exactly one poker player in my entire region with an accountant with any focus on gambling and he’s a Harvard whiz kid. Oh and probably Deeb but I don’t know that for sure and anyway he is not hurting.

 

[doctorchips]

"well, who can't afford a 5% haircut anyway?"

having to pay a slightly higher rate.

This justification can be used universally when applying taxes. It's not just poker pros impacted by this.

Maybe it is true that 99.8% of gamblers in general never meet the criteria to be scrutinized by the IRS, but if more and more people get driven to essentially commit tax fraud, don't you think that has an overall net negative to the gambling industry in general which cascades outward from the core of the industry to secondary and tertiary economic impacts. Places that rely heavily on electronic trails and evidence. KYC laws...etc. Remember, this also effects other forms of gambling and not poker exclusively.

I get it. Tax fraud is an option. Not gambling is one option. Gambling elsewhere is another option. There are options.

You might feel like you can determine when other people can and cannot float a 5% loss in income, but I wouldn't presume as much and I don't think any government should be introducing a new tax without justifiable reasoning. That's all.

 

[ekricket]

There are still states in the US that tax food when you buy it, restaurants or grocery stores. Nobody seems to be up in arms about people having to pay taxes on a necessary living requirement. Probably affects more people than this gambling tax will. Gambling is optional, eating is not.

Get some goddam perspective.

 

[doctorchips]

There are still states in the US that tax food when you buy it, restaurants or grocery stores. Nobody seems to be up in arms about people having to pay taxes on a necessary living requirement. Probably affects more people than this gambling tax will. Gambling is optional, eating is not.

Get some goddam perspective.

Maybe there's a program that could help people with grocery costs or something.

Imagine telling people to 'get perspective' discussing additional tax burdens on gamblers on a literal poker related forum for no apparent reason.

 

[ekricket]

Maybe there's a program that could help people with grocery costs or something.

Imagine telling people to 'get perspective' discussing additional tax burdens on gamblers on a literal poker related forum for no apparent reason.

Maybe there is a program that could help people with gambling problems or something.
Then this tax would be as moot as all the discussion in this thread

https://gamblersanonymous.org/

 

[ekricket]

Why not just invent a new tax on 5% 'magic' inventory for all businesses in the US and make them pay tax on that non-existent inventory?

This IS hyperbole, and not even remotely relevant to any discussion being had here.

I believe the discussion centers around one specific item and it’s possible effects, not overhauling the entire US tax code so everything is fair.

 

[doctorchips]

This IS hyperbole, and not even remotely relevant to any discussion being had here.

I believe the discussion centers around one specific item and it’s possible effects, not overhauling the entire US tax code so everything is fair.

"It's only 5%, if you can't afford a 5% reduction in income maybe you should do something else"

It illustrates a point.

 

[ekricket]

There are still states in the US that tax food when you buy it, restaurants or grocery stores. Nobody seems to be up in arms about people having to pay taxes on a necessary living requirement. Probably affects more people than this gambling tax will. Gambling is optional, eating is not.

Get some goddam perspective.

It illustrates a point.

Seems relevant when you use your logic. Just illustrating how dumb it is to be arguing over this when there are larger tax problems affecting many many more people. May as well be arguing about the tariffs that destroyed the world economy. Glad that only lasted a month, I’m surprised the world rebuilt so fast.

Just waiting on the next wave of hysteria over trivial items that end up being nothing burgers.

 

[smashed_potato]

What is bothering me about this is, “we” everyone on this damn site lives down wind on this to who it will affect.

Does Triton not make a spectacle of Poker? Does it not draw in people, viewership and attention?

Poker is competing against all the other shit in this world for attention and it’s has been successful of late. YouTube has pulled in poker fans with vloggers and a lot of them have a spotty record. Look at Rampage, dude pulls an audience but had an awful year. If it wasn’t for sponsorship and if it was a slightly better year on the felt he’d owe money he never made.

 

[Taghkanic]

"well, who can't afford a 5% haircut anyway?"


This justification can be used universally when applying taxes. It's not just poker pros impacted by this.

Maybe it is true that 99.8% of gamblers in general never meet the criteria to be scrutinized by the IRS, but if more and more people get driven to essentially commit tax fraud, don't you think that has an overall net negative to the gambling industry in general which cascades outward from the core of the industry to secondary and tertiary economic impacts. Places that rely heavily on electronic trails and evidence. KYC laws...etc. Remember, this also effects other forms of gambling and not poker exclusively.

I get it. Tax fraud is an option. Not gambling is one option. Gambling elsewhere is another option. There are options.

You might feel like you can determine when other people can and cannot float a 5% loss in income, but I wouldn't presume as much and I don't think any government should be introducing a new tax without justifiable reasoning. That's all.

Once again, you’re missing the basic math. Let’s break it down with the most generous interpretation.

1) Very few are winning, or winning anything reportable, so they are already not paying taxes. Knock off at least 90% off the pool of impacted players.

2) Even fewer are paying taxes, either because they know it’s not going to be noticed, or don’t care, or don’t even realize they should, or play in home/private games where no one is getting a tax form. Knock off 95% of the remaining 10%.

3) Of that remaining 0.5%, most are big enough winners that they aren’t really going to feel the difference enough to quit poker, as apocalyptically claimed by some. Or they are staked, so it’s largely not their own money. Or they have a clever accountant who figures out an SCorp workaround. Or it is a trivial expense to them.

4) So now we’re down to maybe 1/10th of 1%. These are the small winners caught in the weird and yes stupid gap created by the law where the change from 100% to 90% deductibility starts to look meaningful in the abstract, but per Galfond is going to be typically more like a 4% hit on their net—for that one year. (If they are big winners or losers the next year, it becomes a non-issue.)

5) Of that 1/10th of 1%, the ones who will see a major difference in terms of real dollars (again per Galfond and other experts) are the ultra-high volume low ROI grinders at the top stakes in tourneys like Triton. The number of players who fit this description are surpassingly small. We may now be down to 1/100th of 1% of all players—if they are American. Many are not. Maybe not even 1/1000th of 1%.

You want to cry for 1 in 100,000 players? Spend your energy there? OK.

But don’t tell me poker is going to die because of it. Many are just stampeding along with the others in a social media panic.

What we’re seeing here is the equivalent of workers who make minimum wage getting outraged on behalf of billionaires when the wealthy might pay a little more. A most American phenomenon, which looks bonkers to the rest of the world.

Poker rooms quietly change their rake structures and promotion drops all the time. These changes often impact players’ bottom line far more than 4%, in games where very few are already longtime winners. Do I like it? No. I avoid casino play except for big tournaments for that and other reasons, such as the atmosphere and food sucking.

Yet poker keeps going.

I’d also like to see the rule axed. It’s arbitrary and sillly. But it is hardly the biggest problem in poker, let alone our country.

 

[doctorchips]

Seems relevant when you use your logic. Just illustrating how dumb it is to be arguing over this when there are larger tax problems affecting many many more people. May as well be arguing about the tariffs that destroyed the world economy. Glad that only lasted a month, I’m surprised the world rebuilt so fast.

Just waiting on the next wave of hysteria over trivial items that end up being nothing burgers.

Yes, we know who you voted for.

Maybe learn to recognize your own bias here a little. And the tariffs have no impact? Most of those deals aren't even done yet and you're about to pay between 20-50% more for almost every imported good.

Hey if you want to pay more in tax for no apparent reason don't let anyone stop you

 

[doctorchips]

1) Very few are winning, or winning anything reportable, so they are already not paying taxes. Knock off at least 90% off the pool of impacted players.

2) Even fewer are paying taxes, either because they know it’s not going to be noticed, or don’t care, or don’t even realize they should, or play in home/private games where no one is getting a tax form. Knock off 95% of the remaining 10%.

3) Of that remaining 0.5%, most are big enough winners that they aren’t really going to feel the difference enough to quit poker, as apocalyptically claimed by some. Or they are staked, so it’s largely not their own money. Or they have a clever accountant who figures out an SCorp workaround. Or it is a trivial expense to them.

4) So now we’re down to maybe 1/10th of 1%. These are the small winners caught in the weird and yes stupid gap created by the law where the change from 100% to 90% deductibility starts to look meaningful in the abstract, but per Galfond is going to be typically more like a 4% hit on their net—for that one year. (If they are big winners or losers the next year, it becomes a non-issue.)

5) Of that 1/10th of 1%, the ones who will see a major difference in terms of real dollars (again per Galfond and other experts) are the ultra-high volume low ROI grinders at the top stakes in tourneys like Triton. The number of players who fit this description are surpassingly small. We may now be down to 1/100th of 1% of all players—if they are American. Many are not. Maybe not even 1/1000th of 1%.

You want to cry for 1 in 100,000 players? <<<<

But don’t tell me poker is going to die because of it. <<<< never said this

I’d also like to see the rule axed. It’s arbitrary and sillly. But it is hardly the biggest problem in poker, let alone our country.

This doesn't just impact poker players, it affects all forms of gambling.

The argument that "it won't impact most because most are losers" is a bad justification to do it.

I've never claimed that "poker is dying". If you want to respond to Doug, go ahead.

You want to presume to know how much less income people can be without, or how much additional tax burden they can take on or would be willing to? Go ahead. Presume away.

 

[umbkcshah]

Slightly off-topic, I always am amused when people say it's a business deduction acting like that makes these various expenses 'free.'

No, you still paid for them, but you get a ~25% discount.

As far as gambling taxes, it's not great, but it'll show a tax increase in theory assuming people do it and possibly be an easy audit trigger. Losing the standard deduction to itemize losses already lead to most ignoring it, compared to if it was net. Similar to the out of state purchases, etc.

 

[Lil Tuna]

Yes, we know who you voted for.

Maybe learn to recognize your own bias here a little. And the tariffs have no impact? Most of those deals aren't even done yet and you're about to pay between 20-50% more for almost every imported good.

Hey if you want to pay more in tax for no apparent reason don't let anyone stop you

 

[doctorchips]

[]

Thanks I appreciate it!

 

[Lil Tuna]

Thanks I appreciate it!

A good sense of humor is always the best remedy.
Gambling taxes are for idiots.

 

[ekricket]

you're about to pay between 20-50% more for almost every imported good.

Haha except for food (I’m a carnivore, that other shit is what food eats) I import almost all of my foreign goods myself. I also use my passport to avoid the foreign taxes when I’m buying - like VAT and other government schemes. So no, I’m not about to pay more for anything imported unless I choose to.

I don’t buy a new pair of pants everyday
I don’t buy a foreign made car everyday
I don’t buy a refrigerator everyday
I don’t report gambling losses or wins

You may as well be bemoaning that you pay more for stuff than your grandad did, boomer. Look at history- that’s how it’s been working since governments started “taking care” of their people.

It doesn’t matter who I voted for, I’m not a grass eating herd animal. Perhaps you may have noticed that from my time and posts here. I do fine no matter what party is in office, that’s what People do.


What’s your end game here? It’s a change, and sometimes they work and sometimes they don’t. Why don’t we wait and see the effect of it before you start bashing it.

We know who you “voted” for too.

 

[doctorchips]

Haha except for food (I’m a carnivore, that other shit is what food eats) I import almost all of my foreign goods myself. I also use my passport to avoid the foreign taxes when I’m buying - like VAT and other government schemes. So no, I’m not about to pay more for anything imported unless I choose to <<<<<

I don’t buy a new pair of pants everyday
I don’t buy a foreign made car everyday
I don’t buy a refrigerator everyday
I don’t report gambling losses or wins

You may as well be bemoaning that you pay more for stuff than your grandad did, boomer. Look at history- that’s how it’s been working since governments started “taking care” of their people. <<<<<

It doesn’t matter who I voted for, I’m not a grass eating herd animal. <<<<

We know who you “voted” for too. <<<<

I highlighted the best parts of your reply here. I appreciate someone with a good sense of humour.

I’m not about to pay more for anything imported unless I choose to.

I'm sorry to tell you this, but lots of domestic goods are produced with foreign made parts contained within them.

 

[Lil Tuna]

I'm sorry to tell you this, but lots of domestic goods are produced with foreign made parts contained within them.