Tax Time Questions

Raskol · Post by **Raskol** » Tue Apr 14, 2009 5:53 am

OK, April 14th, time to begin looking at the taxes....

The amount shown on the 1099 that Greg so politely mailed us goes onto line 21 of the 1040. Can we deduct the entry fee for all of our NFBC leagues from last year? And, if so, does that go onto line 28 of Schedule A?

I know there are folks trolling the boards who (A) win alot and (B) do their own taxes, so I'm reaching out to the community to help me keep as much of my money out of the bailout coffers as possible....

Thanks!

King of Queens · Post by **King of Queens** » Tue Apr 14, 2009 6:01 am

Originally posted by Raskol:

OK, April 14th, time to begin looking at the taxes....

NorCalAtlFan · Post by **NorCalAtlFan** » Tue Apr 14, 2009 6:21 am

good luck with deducting your expenses. im sure there are some creative people here, but the odds of it passing the smell test are slim.

Chest Rockwell · Post by **Chest Rockwell** » Tue Apr 14, 2009 6:59 am

Originally posted by NorCalAtlFan:

good luck with deducting your expenses. im sure there are some creative people here, but the odds of it passing the smell test are slim. No smell test here the expenses are deductible. Just be able to document them and keep them reasonable.

RedRyder · Post by **RedRyder** » Tue Apr 14, 2009 7:06 am

I have an accountant do my taxes, but I do deduct all my expenses and entry fees. Schedule C Line 24 for expenses, Line 27 for fees.

Richie · Post by **Richie** » Tue Apr 14, 2009 7:32 am

Deductions are 100% legitimate. the costs to create an income are deductible in all cases. How much profit did you make. You paid 1300 and won say, $4500. thats a profit of $3200 and you will be taxed on $3200

viper · Post by **viper** » Tue Apr 14, 2009 7:45 am

Since this is considered a hobby, you may deducted expenses up to the extent of your winnings. If you won $2000, then you can deduct up to $2000 in expenses. I would think a problem could be that the deduction would fall under the Misc deductions on Schedule A and they have a 2% floor [only deduction is excess of 2% of your AGI qualify for deductions].

Now if you can show you make money three of five years with this tax year being the 5th, you are under a different set of rules as this "hobby' can then be considered a business. There are probably several in here who qualify under these guidelines.

Using Schedule C or Schedule C-EZ implies this is a business. I doubt if you would be audited but I believe the requirement to be a "business" applies. For a "hobby business' that would mean the profit requirement that I mentioned above.

I am neither a CPA nor Tax Lawyer but I work for one. I was checking the 2008 tax guide to confirm what I 99% knew to be sure. I have to think there is a true tax lawyer playing this who would know for sure.

[ April 14, 2009, 01:50 PM: Message edited by: viper ]

SluggoJD · Post by **SluggoJD** » Tue Apr 14, 2009 8:37 am

Deleted.

[ April 14, 2009, 02:38 PM: Message edited by: SluggoJD ]

Dyv · Post by **Dyv** » Tue Apr 14, 2009 11:47 am

Rule #1: Deduct everything except the receipt book you bought to doctor up false receipts.

Just sayin....

Bobby J · Post by **Bobby J** » Tue Apr 14, 2009 1:38 pm

I have a tax guy do my taxes also, you can deduct all of your expenses, I have for the whole five years I have been doing high stakes fantasy sports. The only thing he asks is that at some point I show a profit or the IRS will start asking questions. He is also an ex-IRS agent. Five years in order, loss, loss, even, loss, big profit. I should be good for about the next 50 years.

viper · Post by **viper** » Tue Apr 14, 2009 2:06 pm

Originally posted by Bobby J:

I have a tax guy do my taxes also, you can deduct all of your expenses, I have for the whole five years I have been doing high stakes fantasy sports. The only thing he asks is that at some point I show a profit or the IRS will start asking questions. He is also an ex-IRS agent. Five years in order, loss, loss, even, loss, big profit. I should be good for about the next 50 years. That may or may not keep the IRS off your back but the 2008 master tax guide reads:

"An activity is presumed not to be a hobby if profits result in any three of five consecutive tax years ending with the year in question, unless the IRS proves otherwise."

If it is not a hobby but a business, you can claim losses in those not profitable years. Be aware that the IRS does computer match your 1099s so if you got one, the IRS computers will be expecting it to be on your tax return. Several years back, they did not have the computer match feature operative but they do now.

Frozen Tundra · Post by **Frozen Tundra** » Tue Apr 14, 2009 5:13 pm

How is this a hobby when the goal is to take the cash, serious cash in some leagues? How are you gonna make that slide? I have a hobby, paid $1300 and won $100k. Good luck. A hobby would be playing in a free fantasy league with a lousy T-shirt for a trophy.

This is some sort of gambling and expenses or losses are deductible up to the extent of winnings. And you can deduct your Vegas expenses (not Rhino's though, just casino's) to offset your hard earned cash at this game. Don't know if you can use carryover here. Check with your CPA.

viper · Post by **viper** » Wed Apr 15, 2009 12:13 am

I never said you wouldn't make money and pay taxes on that money. Hell, I would love to win $5000 in this or more. The question was about how you offset winnings and what is allowed by the tax code.

If you read my posts, I did say you could deduct to the extent of winnings. Where and on which form is a question because of the 2% floor on Misc expenses. You cannot just net that 1099 you received. I'm sure some people do just that and nothing happens but technically that isn't right and an audit would disallow it although the tax consequences would be minimal if at all.

As far as this being a hobby, it all goes into the IRS distinction between a hobby and a business. Pretty much, you are a hobby unless you file to become a business. I would think Shawn Childs and a few others may have gone that route [if in fact you can] given all the spend but most will not. As a business with an FEIN, the rules change but for us normals, this is considered a hobby.