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#1
02-10-2015, 04:22 PM
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1099-misc for the NHC
Just received a 1099 from Monmouth Park for their cost for sending me to the NHC. this was my third trip to the NHC and never received any tax form before. Cost was $4350, so although I sadly didn't win a dime i'll be paying about $1600 for the chance.
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#3
02-10-2015, 04:58 PM
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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.
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#5
02-10-2015, 05:21 PM
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#8
02-10-2015, 08:54 PM
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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)
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#9
02-10-2015, 08:26 PM
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#10
02-10-2015, 08:42 PM
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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.
__________________
facilis descensus Auerno
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#11
02-10-2015, 08:50 PM
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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.
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#12
02-10-2015, 09:04 PM
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You think anyone would pay $$ to enter their contest had they known this upfront?
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#13
02-10-2015, 09:06 PM
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#14
02-10-2015, 09:14 PM
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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.
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#15
02-10-2015, 08:38 PM
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#16
02-10-2015, 08:43 PM
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__________________
facilis descensus Auerno
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#17
02-10-2015, 08:44 PM
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Paul
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#18
02-10-2015, 09:04 PM
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__________________
facilis descensus Auerno
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#19
02-10-2015, 08:43 PM
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Paul
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#20
02-23-2015, 07:25 PM
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1099-misc
Update- I went to the NTRA folks with the issue and they told Monmouth you can't assign a value to a seat at the nhc so you can't include the cost as a the 1099. how's that for a good outcome. I entered the Saturday contest at Monmouth and was told that a new 1099 was needed. bill
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