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  • Jonede

    • 320

      RG Overall Ranking

    • 2019 DraftKings FFWC Finalist

    • 2017 DraftKings FFWC Finalist

    Looking for some help here. I had lunch with my accountant today and we noticed some irregularities on the value live finals are being given in relation to entry fees. I was fortunate enough to win a ticket to the Pebble Beach golf live final this year. The entry fee for the qualifier was $1500 and I had to beat out 16 other entrants to win the trip. I was able to do that and won a total package valued at $20,638. This would be considered taxable income.

    After looking at my contest history, I saw the entry fee for the tournament listed at $11,538. DraftKings sends 1099s at the end of the year for winnings – entry fees. My concern here is that it will appear that I was given an additional $9100 ($20,638-$11,538) for the trip when they send that form at the end of the year. 16 entrants at $1500 each is $24,000. We already paid for the trip on the front end and should not have to cover this tax liability.

    I checked into my previous trip details I won on FanDuel and that is not the policy there. This additional $9100 in taxable income really ruins the value of the trip and live finals for me in general. Qualifying is difficult enough, but adding in a tax burden has soured me on the idea of trying to qualify in the future. Can anyone confirm?

  • anilprao88

    • 26

      RG Overall Ranking

    • Ranked #3

      RG Tiered Ranking

    • 2017 DraftKings FFWC Finalist

    • 2018 DraftKings FBWC Finalist

    I’m a little confused by this. Are you saying that the $24000 – $20638 = $3,362, and that $3,362 is you ‘paying for the trip’? I’m pretty sure that $3,362 is just the rake for the qualifier. Then, I would assume the $9100 is the value of the accomodations, cash or whatever. I’d imagine it wouldn’t be this high at a normal live final (NBA, MLB, NFL). Did they pay out everybody the value of last place before the live final? If so, that could be why the value of the tournament is listed as being so low, in comparison to the package you won.

  • stlcardinals84

    Leading RG Analyst

    • 287

      RG Overall Ranking

    • 2018 DraftKings FBWC Finalist

    • 2018 DraftKings FBBWC Finalist

    @Jonede said...

    I was able to do that and won a total package valued at $20,638. This would be considered taxable income.

    The quoted statement contradicts this statement: “My concern here is that it will appear that I was given an additional $9100 ($20,638-$11,538) for the trip when they send that form at the end of the year.”

    In my opinion, your taxable income depends on how much you won at the live final, and you have $1,500 in entry fees. If they show the entry fee as $11,538, then they “grossed up” the entry fee to account for the trip value, and you have no extra taxable income outside of the cash you won.

    If anything, they did you a favor with this (assuming I have interpreted your post correctly). In any case, you are definitely misinterpreting their handling of it.

    (I am a CPA, so feel free to clarify)

  • Jonede

    • 320

      RG Overall Ranking

    • 2019 DraftKings FFWC Finalist

    • 2017 DraftKings FFWC Finalist

    So I apologize for the lack of clarity here. I updated the numbers below. Here is the breakdown:

    I paid $1500 (entry fees) for the qualifier, which I won and was awarded $1000 (airfare, which was categorized under winnings) and $19,328 (categorized under ticket winnings), for a grand total of $20,328 in taxable income burden that was passed to me. When the tournament started, I was assigned entry fees of $11,538. So regardless of my finish in the live final, my tax exposure was $19,328 (ticket value excluding airfare) – $1,000 (airfare) – $11,538 (value of live final entry fees) = $6,790. That would mean that I am on the hook for the $6,790 x whatever tax bracket I fall into at the end of the year, correct? That’s of course assuming I win during that year and am sent a 1099.

    If that’s correct, that really hurts the value of live finals for me.

  • Jonede

    • 320

      RG Overall Ranking

    • 2019 DraftKings FFWC Finalist

    • 2017 DraftKings FFWC Finalist

    In a previous thread STL, Dan Back commented:

    “I’m sure RotoKevin or a more seasoned Live Final qualifier can confirm, but fairly certain you get taxed just on the winnings you take home from the live final. The value of the trip is rolled into the prize pool & the “value” of the ticket is what the “per entry” buy in would be if it was structured that way.”

    You then replied to that “This is correct.” The above description appears to contradict that.

  • hishboo

    • 14

      RG Overall Ranking

    • Ranked #14

      RG Tiered Ranking

    • 2019 $1M Prize Winner

    • 2018 DraftKings FFWC Finalist

    Is the live final in 2017 or 2018? If it’s in 2017, then you’ll only get taxed on the $1000 airfare money, your winnings + value of the trip (whatever that is).

    If in 2018 (assuming this is the case), I believe you would have to pay taxes on the value of the ticket ($11538), and the “airfare” winnings ($1000) for 2017 taxes. Then when you enter the contest in 2018, the $11538 will get deducted as your entry fee, and whatever you win will get added to your gross winnings for 2018. I imagine you would get taxed on the value of the trip in 2018 as well, not in 2017.

    This hasn’t happened to me with a qualifier, but there were some contest tickets I won toward the end of 2016 that I had to use in 2017, and that’s how it’s treated. Very common, especially last week of NFL season

  • WidumBoise

    What did you guys get for lunch?

  • awesemo

    • 1

      RG Overall Ranking

    • Ranked #1

      RG Tiered Ranking

    • x5

      2019 DraftKings FFWC Finalist

    • x3

      2018 DraftKings FFWC Finalist

    I think that the trip package does count as income, because you receive goods and services totaling that amount. Some of that you may be able to write off though.

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @awesemo said...

    I think that the trip package does count as income, because you receive goods and services totaling that amount. Some of that you may be able to write off though.

    Yes, the “value” of the trip package should count as income. Similar to when someone wins a trip on a gameshow. They would get taxed on the value of the trip.

    Other than that, you should get taxed on the $1000 for airfare and whatever you win in the contest (less your entry fee).

  • Roma315

    Typically you are on the hook for whatever they value it for. Which is why live events don’t interest me.

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @Roma315 said...

    Typically you are on the hook for whatever they value it for. Which is why live events don’t interest me.

    Right. So for example, the value of the DraftKings FFWC is $66,000 I believe. But if you look at just the prize pool, it is $12MM divided by 200 participants. So each person’s equity is $60,000 in the contest. Which means they value the trip itself at $6000. This includes the $1000 for airfare. So essentially they are saying 4 nights hotel in Miami including an excursion, probably a welcoming party, maybe a dinner, food and drinks and and large venue to watch the games the day of the live final, and whatever else (I’ve never qualified for a DraftKings live final so I would not know) is valued at about $5000 per person. So you should be on the hook to pay taxes on the $5000 value of trip, $1000 cash for airfare and then whatever you cash for at the actually live final (obviously less whatever your buy-in for the qualifier was).

  • awf720

    Question- if you get $1000 for airfare. You are booking the airfare yourself then they put $1000 in your DK account. So if you never use that or lose that arent you not paying tax on that 1k??

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @awf720 said...

    Question- if you get $1000 for airfare. You are booking the airfare yourself then they put $1000 in your DK account. So if you never use that or lose that arent you not paying tax on that 1k??

    The $1k will still count towards your overall winnings regardless of what you use it for. Now if you have loses after that greater then the $1k, then technically you will not pay taxes on that. You only pay taxes on your net profit (winnings less buy-ins). But the $1k is going to count the same as if you won $1k in a contest with no live finals attached to it.

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