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Private Bets - the law? NE1?

Topic closed. 9 replies. Last post 12 years ago by LANTERN.

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waynr's avatar - moon2

United States
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February 23, 2004
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Posted: February 11, 2005, 8:52 am - IP Logged

If two or more individuals made a private informal bet online and the winning person was paid through Paypal, what would the legal status be of those transactions? Anyone know the law, if or how it applies to bets between individuals? Supposedly "private bets", but hopefully by now most everyone "online" should know better IMO.

    Todd's avatar - Cylon 2.gif
    Chief Bottle Washer
    New Jersey
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    Posted: February 11, 2005, 8:54 am - IP Logged

    If there was no record of the bet, who would know that the PayPal money was not just a gift?

     

    Check the State Lottery Report Card
    What grade did your lottery earn?

     

    Sign the Petition for True Lottery Drawings
    Help eliminate computerized drawings!

      waynr's avatar - moon2

      United States
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      Posted: February 11, 2005, 9:46 am - IP Logged
      Quote: Originally posted by Todd on February 11, 2005

      If there was no record of the bet, who would know that the PayPal money was not just a gift?




      True enough for a one time or every blue moon bet, but what about an ongoing thing where those transactions start piling up in the history folder. Come tax time what to do? Will the IRS believe they are all gifts if audited?
        Todd's avatar - Cylon 2.gif
        Chief Bottle Washer
        New Jersey
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        Posted: February 11, 2005, 11:01 am - IP Logged

        I don't think you need to give PayPal your SSN, so the IRS does not know about it.

         

        Check the State Lottery Report Card
        What grade did your lottery earn?

         

        Sign the Petition for True Lottery Drawings
        Help eliminate computerized drawings!

          SirMetro's avatar - center
          East of Atlanta
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          Posted: February 12, 2005, 12:38 pm - IP Logged

          As I understand how Taxible Income is defined, winnings, less any applicable expense is treated much like Stock transactions, basically, the net profit after all applicable costs are deducted is considered taxible. Commonly, the dollar value is set around $599 before IRS will take notice. If you truly have a tax issue concern, I suggest you go to the IRS web site and look up what the current rules are regarding gambling wins. You may also want to review the current text for your state. On average, most states defer to the IRS for the definition of taxible income. Also, keep in mind, the IRS does define "ill gotten gains" to be taxible income. More Drug lords went to jail thanks to the IRS for tax evasion instead of drug trafficing.

          Simply put, if you have a concern and you like to sleep at night, call your tax advisor (or get yourself a tax advisor). It's a lot easier to pay now then to pay penalties on top of what you should have paid (ignorance of the law is not considered excusable in the courts).

          Sir Metro

          When I was a teen, I knew it all. When I became 21, I was in charge. When I became 30 something, I finally realized how little in life I actually knew.

            SirMetro's avatar - center
            East of Atlanta
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            Posted: February 12, 2005, 12:40 pm - IP Logged

            PS: If for whatever reason the other "Party" is writing the "Loss" off, IRS is definitely going to be watching for where it went.

            Sir Metro

            The last time I assumed no one knew, it turned out that the only one who did not know was me.

              Todd's avatar - Cylon 2.gif
              Chief Bottle Washer
              New Jersey
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              Posted: February 12, 2005, 12:52 pm - IP Logged

              SirMetro:

              Keep in mind I'm talking about a private thing between two people who know each other, and who are not going to be writing their private bets into their tax returns.  Of course if it were a business transaction you would definitely report it accurrately on your return.  The relatively small amount paid now is nothing compared to what would happen if they caught you later. 

              Again, I am talking about a private matter.  Also, the original question was about the legality of paying each other through PayPal, which is fine.

               

              Check the State Lottery Report Card
              What grade did your lottery earn?

               

              Sign the Petition for True Lottery Drawings
              Help eliminate computerized drawings!

                waynr's avatar - moon2

                United States
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                Posted: February 12, 2005, 2:20 pm - IP Logged

                The question was hypothetical and only pertained to private informal wagers between people who may not actually know each other, but trust enough for small bets. I was wondering if it was illegal besides tax liabilities if it were legal. I'd hate to have to deal with a bunch of forms and legal mess after finding out this and that should have been done beforehand. I suppose the amount would be the biggest factor. Thanks for the replies.

                  WIN  D's avatar - q05Q0
                  Stone Mountain*Georgia
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                  Posted: February 12, 2005, 4:20 pm - IP Logged

                   quote...... "I was wondering if it was illegal besides tax liabilities if it were legal. I'd hate to have to deal with a bunch of forms and legal mess after finding out this and that should have been done beforehand.

                  http://www.century21cayman.com/files/osc/cii/ptax_free.htm

                   

                   

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                                                                                                         Win d    

                    LANTERN's avatar - kilroy 28_173_reasonably_small.jpg
                    Tx
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                    Posted: February 12, 2005, 8:14 pm - IP Logged

                    Very nice Win D.

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