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  • Taxman Tax Question

    Taxman,

    Hypothetically, if your BW Hilton Team had won some $, how do you handle taxes?

    1. Would you pay all the taxes and have them compensate you?
    2. Could all players could just declare their share of the winnings?
    3. Would taxes be due for 2012, or if you don't receive your winnings until 2013, would they be due for 2013?
    4. If the season had ended after January 1, would it then be on the 2013 tax return?
    4. I assume you can deduct the entry fee?

    Thanks!

  • #2
    Wide,

    Here's how I would have done it, if we cashed. We had a rough season, but I expect to be back next year, and with advanced notice, maybe have to BW teams.

    Net the winnings less the entry. That is the tax basis.

    Then from the winnings make LVH either withhold taxes or make an estimated payment today. Since the entry was in my name and not in a partnership, I would have the taxes on my return and give the 4 others their payments in a check in which they would not have to declare the income. Partnerships have to turn a profit on occasion, if not it's a hobby. So, IMO, this is the easier way to do it.

    If we were in the running to finish with the best overall record, I would have been out there to potentially hedge a bet or two. Plus, I would get the cash ASAP.

    Taxes would be due for 2012 because it was earned in 2012 (last game was 12/30/12).

    Comment


    • #3
      Okay, so you can't just declare your share and have them declare their share?

      And if the last game was after Jan. 1 (as most years are), it would actually go on the next year's tax return? But you might pay estimated taxes or you could end up owing a penalty?

      Yes, definitely hedge.

      The guy who won this year (Al Sr.) went 5-0 on the this last week and won $447,000! I wonder how much of that he hedged and "lost." Always pays to pick the night game so you have that opportunity to hedge. One winner a year or so ago did a lot of hedging on the last week and hit some middles! That would be so sweet I think I'd retire on that note.

      I finished just 3 games out of the money in the Carib Contest this year after finishing IN the money on TWO entries last year. One of my frelatives finished in the money this year. That's why I was asking if he could just declare it or if I have to.

      Thanks!
      Last edited by widestrides; 12-31-2012, 02:17 PM.

      Comment


      • #4
        Widestrides and Taxman,
        Help me on this. Are you trying to hedge to lose money
        and pay a little less in 2012 taxes or win and take that
        money to help offset the withholdings?
        I've had money (20-25%) taken right out and never looked
        to cover that. Did I do it wrong? Thanks in advance for
        the advice!

        Comment


        • #5
          The hedge is just so you win SOME money if you are on the verge of winning a contest. If you stand to win $10,000 in a contest if one more game goes your way, you could consider betting $5,000 on the other team and guarantee winning $5,000. Or you could hedge just $2,000 or $3,000. Nothing to do with taxes at all on the hedging angle.

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          • #6
            Noted. See me slapping my head right now

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