Taxation on Poker Tournament

TAXATION ON POKER TOURNAMENT Name: Grade Course: Tutor’s Name: (13, December, 2010) Taxation on Poker Tournament Abstract Gambling has been meet with mixed reaction; that of being a game of chance or skills. It is worth noting that since the enactment of tax provision that concerns wagering, tournament pokers has tremendously change and televised across the country (Garcia, 2010). Two notable cases concerning poker tournament include that of George E. and Gloria Tschetschot v. Commissioner and Commonwealth of Pennsylvania vs. Diane A. Dent. In the first case (George E. and Gloria Tschetschot v. Commissioner), the court rejected George and Gloria arguments that tournament poker is not a gambling or wagering game but rather an entertainment and professional sport. It was held that there were no meaningful differences that could warrant different treatment in terms of taxation. The two arguments for poker tournament to be treated as any other tournament sports for instance tennis and golf was rejected. Wagering and gambling is treated by congress differently from other business does not go against of equal protection. The losses were thus limited by code Sec. 165 to the amount of what she could have won from the tournament. Lack of clear demonstration that they acted in good faith or there was a reasonable cause for understatement, constitute to accuracy related penalty (George E. and Gloria Tschetschot v. Commissioner, 2007). In the trials, it was held that George was not a professional gambler but her wife Gloria was, since she was playing tournament poker hence not subject to limitations of section 165 (d) concerning losses incurred from gambling. It was held that by the respondent that her activities were detectable and she was liable for accuracy. Additionally, her activities were classified as entertainment and professional sport. Two main issues emerged, whether her losses were limited to section 165(d) to the amount of winning and a penalty under section 6662(a) for substantial under statement of income tax. Introduction The essay is a critical analysis of issues surrounding gambling in United States of America. It is legally restricted but the participant is available and increasing. In terms of revenue generation, the gaming in general contributed to $90.90 billion in 2006. The figure is arrived at after establishing the differences between the total amount wagered and those won and returned to the players. Generally speaking the sector provides tax revenue and job opportunities. Those against gambling associate it with crime, political corruption. Legally, various government levels have authorized several forms of gambling ranging from bingo to multi billion dollar poker tournaments (Garcia, 2010). It has been brought forth that gambling has historically been part of American culture. It is the courage to take risk dare that has made what U.S.A is what it is today. Gabling entails the concept of taking one being willing to take risk and make bets even when the situation seem gloomy so that one can increase a chance of gaining from the venture. One notable field where betting can make one gain profit just like from stock investment is sport betting-porker tournament among others. However, it is worth mentioning th...