For tax purposes, poker still gambling

The U.S. Tax Court has weighed in on poker's tired skill versus luck question, ruling that tournament play is gambling, not a sport. As such, those who play the game professionally are not exempt from Section 165(d) limitations of the tax code.

The case was brought before the court by George and Gloria Tschetschit of Cedar Rapids, Iowa, who argued that Gloria's pro tournament play isn't gambling and therefore isn't subject to limits on incurred losses.

This came about after the IRS found the couple's 2000 joint tax return was short more than $12,000.

But during the trial the couple maintained that Gloria's poker playing wasn't gambling but rather "entertainment and professional sport."

They cited the rules of live games - that participants can't cash out of a tournament midway through; the events can be lengthy and not end until one player has all the chips - as evidence that poker isn't a wagering activity.

Instead, they said, Gloria's $30,000 in net losses should be treated the same as those of any professional athlete.

The judge refused to be slow played however and moved that poker is a combination of skill and luck.

The court did determine that Gloria's business expenses as a pro gambler are deductible under the tax law's Section A, Itemized Deduction, but only up to her $11,000 in winnings.

The IRS, meanwhile, is still determining whether there was a significant understatement of income on the couple's part.

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