teamplay taxes

I bankrolled someone to play blackjack for 5 months. I assume my gambling income is whatever I received from breaking the bank, minus what I contributed to the bank. And his gambling income is likewise. So it's like one giant 5 month long session. This seems tax advantaged compared to playing individually with daily sessions, because instead of reporting $100x wins and $99x losses, one only reports $x wins and can perhaps still take the standard deduction. Is this a correct way to report gambling income from a joint bankroll? If so I should get someone to bankroll me $1 every year just for tax purposes.

Quote: scrooge

I bankrolled someone to play blackjack for 5 months. I assume my gambling income is whatever I received from breaking the bank, minus what I contributed to the bank. And his gambling income is likewise. So it's like one giant 5 month long session. This seems tax advantaged compared to playing individually with daily sessions, because instead of reporting $100x wins and $99x losses, one only reports $x wins and can perhaps still take the standard deduction. Is this a correct way to report gambling income from a joint bankroll? If so I should get someone to bankroll me $1 every year just for tax purposes.

It's a great question. And the advice you receive here may or may not be correct. I would assume there are tax attorneys/CPAs who specialize in gambling issues. You can take the free advice from a guesser like me, or pay for sound advice.

My guess..... You would need to tell us what the contractual deal you had with the guy you bankrolled. If you fronted him $100,000, and he just had to pay you $2,000 a month then $100,00 at the end of the year it would be clear to me it is Not relevant how his gambling sessions went; you would just pay taxes on $24k. If you each were going to split his winnings, but you were continuously the owner of the entire bankroll, then I would guess the IRS would want you to do sessions. You could attribute half of each session's win or loss to him, half to you. I think the IRS would look at it that way to SPECIFICALLY prevent someone from doing what you propose.

Quote: scrooge

I bankrolled someone to play blackjack for 5 months. I assume my gambling income is whatever I received from breaking the bank, minus what I contributed to the bank. And his gambling income is likewise. So it's like one giant 5 month long session. This seems tax advantaged compared to playing individually with daily sessions, because instead of reporting $100x wins and $99x losses, one only reports $x wins and can perhaps still take the standard deduction. Is this a correct way to report gambling income from a joint bankroll? If so I should get someone to bankroll me $1 every year just for tax purposes.

If you didn't do the gambling I would conclude that you were an investor. Treat it as investment income, not gambling income.

eg. you invested $100k and you received $30k in dividends, just claim the $30k.

The terms of the written agreement were that I contributed 10k and he contributed 4k. He did all the playing. I was entitled to principal plus 5/14 of the profits and he was entitled to principal plus 9/14 of the profits. So the percentage of the bankroll that I "owned" declined continuously as the bankroll increased.