46 replies to this topic

[Tosh]

The Real Winners at the World Series of Poker
This year's World Series of Poker concluded early this morning at the Rio Hotel and Casino in Las Vegas. The winner of the main event won $9,152,416 but would he actually end up with all that money?

This year's winner was Peter Eastgate from Denmark. The United States and Denmark have a tax treaty. Because of the treaty Mr. Eastgate doesn't owe a penny to the IRS. That just leaves the Danish tax authorities.

Denmark's tax agency is called SKAT. Denmark, like the United States, does tax gambling winnings. For casino gambling (which is where I believe this will be classified) the tax rate is 45% on the first 4 million Danish Kroners; it's 75% on income above that. Today $1 is worth 5.88907 DKK; Mr. Eastgate won 53,899,250.70 DKK before taxes. Mr. Eastgate will owe about 39,224,438 DKK in tax ($6,660,545). Put another way Mr. Eastgate will keep 14,674,813 DKK ($2,491,871) of his winnings—just 27.23% of his prize. Yes, he faces an effective tax rate of 72.77%. Ouch.

Ivan Demidov of Moscow, Russia finished second and won $5,809,595. The United States and Russia also have a tax treaty and Mr. Demidov won't have any of his winnings withheld by the IRS. Russia has a 13% flat tax rate, so Mr. Demidov will owe about $755,247 to the State Taxation Service of Russia.

Third place went to an American, Dennis Phillips of Cottage Hills, Illinois. Mr. Phillips won $4,517,773 for his efforts. He's an amateur gambler so he won't owe self employment tax on his winnings. Still, he can expect to pay $1,568,950 to the IRS and $135,533 to the Illinois Department of Revenue.

Ylon Schwartz of Brooklyn, New York, finished in fourth place for $3,774,974. He is a professional gambler so he'll owe self-employment tax on his winnings. He'll also owe state and New York City income tax. His likely tax bite is $1,396,304 to the IRS and $387,966 to the New York Department of Tax & Finance.

Two Canadians finished in fifth and sixth place. Scott Montgomery of Perth, Ontario finished in fifth place for $3,096,768. The US-Canada tax treaty specifies that 30% of his win will be withheld to the IRS. Thus, $929,030 was withheld. Mr. Montgomery is a professional gambler so he will owe tax on his win to Revenue Canada. However, he will be able to take a credit on his Canadian tax return for the money withheld to the IRS. As Canada's tax rate is 29% he likely won't have to pay any additional funds to Revenue Canada. However, when provincial taxes are included the tax rate becomes 46.41%. Thus, Mr. Montgomery will owe tax in Canada: about $491,728 after the credit for the tax withheld to the IRS. [My thanks to the commenter who pointed out the impact of provincial taxes.]

The sixth place finisher was Darus Suharto of Toronto. Mr. Suharto is an accountant, so he won't owe tax to Revenue Canada on his won. However, of the $2,418,562 he won, $725,569 was withheld per the US-Canada tax treaty. He may be able to claim a credit on his Canadian tax return for years to come based on this withheld money and eventually get it back.

The Franchise Tax Board (FTB) was rooting for David Rheem or Kelly Kim to finish in first place. These two Californians finished in seventh and eighth place, earning $1,772,650 and $1,288,217 respectively. Mr. Rheem will owe about $651,262 to the IRS and $170,302 to the FTB; Mr. Kim will owe about $470,995 to the IRS and $121,074 to the FTB.

Craig Marquis of Arlington, Texas finished in ninth place. He is also a professional gambler, and of the $900,670 he won he'll have to fork over about $328,911 to the IRS.

Here's a table summarizing the tax bite:

Amount won at Final Table $32,731,625

Tax to SKAT (Denmark) $6,660,545

US Tax Withheld to IRS $1,654,599

Add'l Tax Owed to IRS $4,416,422

Total Tax to IRS $6,071,021

Tax to State Taxation Service (Russia) $755,247

Tax to Revenue Canada $491,728

Tax to NY Dept of Tax and NYC $387,966

Tax to California FTB $291,376

Tax to Illinois Dept of Revenue $135,533

Total Taxes $14,793,416


That's a total tax bite of 45.20%.

So congratulations to the winners. Just remember that a winner—perhaps the biggest winner of all—is the taxman. As we all know the house always wins.

[Tosh]

http://taxabletalk.com/

[dt1313]

I thought about the tax implications but I didn't know the numbers. They. are. RIDICULOUS !!!!!

I guess Demidov really makes out on this one.

Phillips even makes out better than Eastgate. Can he denounce his citizenship and go elsewhere ? Holy Sh*tballs Batman


F*ck the HOUSE ! (<---- taxman)





Dan

[antistuff]

put the cash in a suitcase and go to mexico.

[No_Neck]

invest the cash in some sort of tax deductible investment and make millions for years to come.

FYP

[cwik]

put the cash in a suitcase and go to mexico.

Seriously, if you are Peter Eastgate can you just decided not to return to Denmark and book an extra $6.5m?? Or is it more complicated then that?

[AAsnake88]

Seriously, if you are Peter Eastgate can you just decided not to return to Denmark and book an extra $6.5m?? Or is it more complicated then that?

I would seriously consider all options if I were him.

[sennin]

Man that sucks for eastgate

[albasuna]

HOLY CRAPPP taxes are just brutal.

[Waffles2003]

maybe he established residency in Monaco before the final table started?

[TB17]

lol donkaments

[JoblessBast]

lol donkaments

Same deal for cash games.

(Unless you're hiding under the mattress.)

[Dirtydutch]

Same deal for cash games.

(Unless you're hiding under the mattress.)

That's the point; cash game players, no one is really watching, any you can lie pretty easily.

[sandwedge]

I would hate to pay that much in taxes. Sure am glad I didn't final table the ME.

[Cappy37]

In other news, last night over ten thousand professional poker players bought summer homes in Russia and started the paperwork on Russian citizenship . <sw>

This is gonna be bigger than Moneymaker for Poker. The Russian Invasion is going to actually be the exact opposite of what we expected.

[dt1313]

In other news, last night over ten thousand professional poker players bought summer homes in Russia and started the paperwork on Russian citizenship . <sw>

This is gonna be bigger than Moneymaker for Poker. The Russian Invasion is going to actually be the exact opposite of what we expected.

lol...I agree


Or, perhaps London is the place to move....

I just read this on 2+2. I don't know if it's true but I sure hope it is for Eastgate's sake.

Let me correct this quickly.

Peter Eastgate moved to London in September just after EPT Barcelona, and will therefore NOT be eligible to pay taxes of the entire prize. The $900k that he was already paid in july is going to be tax eligible, and the percentage will be around 55% and definitely NOT 75%.

The rest of the money ($8.2 million) is tax free, as it was earned while being a citizen of London.

I'm Danish and working as a poker journalist, and this info is at least how things looks like at the moment, but the story has undeniably caused some head lines in the tabloid papers today.

Dan

[dlingdling]

Phillips even makes out better than Eastgate. Can he denounce his citizenship and go elsewhere ? Holy Sh*tballs Batman

Not so simple anymore. The old (1996) law said you had to keep paying taxes to the US for 10 years after leaving. Now, a new rule slipped into a Veterans benefits bill, taxes all assets over $600k as though they've been sold on the day you leave the country.

[Flushgarden]

What's the point of even having large poker tournaments when that much money is stolen by the government?

Lets say I get together with a group of people. We all have money that we have already paid taxes on when we earned it from our jobs. We decide we want to redistribute that money by playing a game. What gives the government a right to a cut of that money again once it has been redistributed via said game?

The government should have no right to ANY of that money.

I hate our government.

We should get rid of income taxes and have a national sales tax. Essential items that lower income people have to spend a large portion of their earnings on can be taxed the least, and luxury items taxed the most. That is the only fair way (except for maybe a flat tax).

[mtdesmoines]

effective tax rate of 72.77%. Ouch.

Anyone want to comment on the +/- EV of even playing at that tax rate?

[NoSup4U]

Pretty standard. Welcome to the ever increasing world of tax creep. This is why some of us are Republicans

j/k, its very sick that the guy who won 9M is going to take home less than the guy who came in 3rd and won 4.5M.

Mark