INDUSTRY FORUM

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  • SmartWater

    Marketing and Social Media Manager

    Hello Grinders!

    One of the most important days of the DFS year is nearly upon us: the Super Bowl? Nope – the tax deadline!

    We’ve once again teamed up with the best in the business to help make sure you have everything in order for the current tax year.

    DFS Accounting Services, LLC has over 30 years of collective accounting experience and are a registered and licensed CPA firm with the AICPA and IL CPA Society. In short, they can provide unparalleled tax and consulting services for casual players and seasoned DFS Pros alike. They offer free tax consultation for your DFS activities over at dfsaccounting.com

    This is our 3rd year working with DFS Accounting and many of our own staff use them for their annual tax services. If you have any questions, this is your chance to ask away in this year’s Q&A thread!

    DFSAS Disclaimer: DFS Accounting, LLC are Certified Public Accountants licensed by the AICPA and State of Illinois. Any information provided is for informational purposes only and is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant, CPA, lawyer or other competent financial professional. Information posted by DFS Accounting, LLC on RotoGrinders or any other media forum does not constitute an accountant-client relationship. At your request, DFS Accounting, LLC can send an engagement letter, which outlines their responsibilities provided under their engagements.

  • QuickInfo

    @DFSAccounting said...

    DFS is considered a hobby (from an IRS perspective). You cannot deduct expenses or losses against the income. The only way you can do this is if your DFS venture is considered a business.

    First, I think it’s awesome of you to answer questions here. One question arose from this answer, though. If the IRS requires the firms like DK to net out entry fees from their 1099, it makes little sense as to why other entry fees within DFS would be considered off-limits to deduct? I can somewhat see the perspective that other types of gambling losses might be unable to be applied based on what I’ve read, but if the IRS is already requiring the sites to calculate an amount netted of entry fees, it would stand to reason all DFS entry fees would be allowed to be calculated to get to the taxable amount? Maybe I’m missing something, since I haven’t gotten my form for this year yet (as DK got an extension) but it’s never seemed to be calculated based only on the entry fees for contests I won, it has always appeared to be all my entry fees for the year?

  • DFSAccounting

    @QuickInfo said...

    First, I think it’s awesome of you to answer questions here. One question arose from this answer, though. If the IRS requires the firms like DK to net out entry fees from their 1099, it makes little sense as to why other entry fees within DFS would be considered off-limits to deduct? I can somewhat see the perspective that other types of gambling losses might be unable to be applied based on what I’ve read, but if the IRS is already requiring the sites to calculate an amount netted of entry fees, it would stand to reason all DFS entry fees would be allowed to be calculated to get to the taxable amount? Maybe I’m missing something, since I haven’t gotten my form for this year yet (as DK got an extension) but it’s never seemed to be calculated based only on the entry fees for contests I won, it has always appeared to be all my entry fees for the year?

    It is our understanding that the 1099 from DK/FD is calculated taking the winnings/income less the entry fees/expense.

  • Unico10

    • 582

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    • Ranked #86

      RG Tiered Ranking

    @QuickInfo said...

    One question arose from this answer, though. If the IRS requires the firms like DK to net out entry fees from their 1099, it makes little sense as to why other entry fees within DFS would be considered off-limits to deduct?

    ThIs makes TOO MUCH SENSE

  • jamesrrrr

    HERE IS THE PROBLEM MANY ARE RUNNING INTO WITH FANDUEL AND SAELLITE TICKETSS

    WHEN YOU WIN A $10 TICKET THEY VALUE IT AT 10.00.
    WHEN YOU SPEND IT THEY VALUE IT AT $0.

    CORRECT ACCOUNTING
    BALANCE
    DESCRIPTION CREDIT DEBIT (CASH+ TICKETS)
    BALANCE START $0.00
    DEPOSIT $10.00 $10.00
    BUY 10 SAT TICKETS $10.00 $0.00
    I WIN 2 $10.00 TICKETS $20.00 $20.00
    USE TICKETS AND LOSE $20.00 $0.00

    JR PROFIT/LOSS -$10.00

    i LOST MY$10.00

    FANDUEL ACCOUNTING
    BALANCE
    DESCRIPTION CREDIT DEBIT (CASH+ TICKETS)
    BALANCE START $0.00
    DEPOSIT $10.00 $10.00
    BUY 10 SAT TICKETS ($1 PIECE) $10.00 $0.00
    I WIN 2 $10.00 TICKETS 0 $ 0.00
    USE 2 TICKETS and ($0) $0.00

    JR PROFIT/LOSS $10.00

    BY CHANGING THE TICKET VALUE THEY MAKE $10.00 LOSS INTO $10 PROFIT.

    SO NOT ONLY DO YOU LOSE $10.00 THEY WANT YOU TO PAY TAXES ON THERE WINNINGS

    YOU BOOK ME AS A $20 WINNER. FOR TWO TICKETS
    WHEN I USE TWO TICKETS YOU VALUE THEM AT ZERO.
    IT APPEARS THAT I WON WHEN I HAVE LOST $10.00

    YOU VALUE THE TICKETS AT $20 WHEN I WIN THEM.
    BUT WHEN I SPEND THOSE TWO TICKETS YOU VALUE THEM AT $0.
    NOW YOU WANT ME TO PAY TAXES ON THE $10.00 OF YOUR REVENUE.

    UNDER WHAT IRS CODE CAN YOU VALUE TICKETS AT ONE PRICE AND THEN CHANGE THE VALUE?

    IT MAKES NO SENSE.

    I SEND YOU $10.00 AND LOSE IT BUT YOU CLAIM I WON.

  • jamesrrrr

    SORRY THE SPACING DID NOT WORK. I CAN SS IF ANYONE WANTS ONE.

    HOW THEY CAN IS RIDICULOUS.

  • Pats7914

    • 74

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    • Ranked #98

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    Sites sending you a 1099 does not assure that is the correct amount of tax that you owe.

    We all take a risk when playing DFS that the IRS follows its only guidance on the subject and asserts the correct income is winnings-cost of winning entries with losing entries not deductible for non pros as DFS is a hobby.

    Everyone playing needs to decide how comfortable they are with that risk, the DK/FD 1099 will not absolve you of liability if the IRS were to make that assertion.

  • jamesrrrr

    TRUE. BUT AS A PUBLICLY TRADED COMPANY AND PRIVATE THERE ARE ACCOUNTING LAWS/RULES THAT LEGALLY APPLY.YOU CAN’T JUST MAKE IT UP.

  • drewcrawford03

    • 2019 FanDuel FantaSea Finalist

    • 331

      RG Overall Ranking

    • 2018 FanDuel WFFC Finalist

    If one were to hypothetically go the self employment/business route with a Schedule C, is there a way to write off tickets/vouchers/travel credits if the net resulting sum is $0?

    For instance say you have $1,000 for tickets/vouchers/credits whatever, that turn into $1,000 of entry fees with a resulting net sum of $0. Is there a way to write this off? I, for the life of me, cannot comprehend how this $1,000 would count as income if it turned into an entry fee and resulted in a wash of $0.

  • tmp13

    So, reading through some various threads on this stuff, it sounds as though you cannot count entry fee losses from one contest against wins from another contest, correct? But what about the original entry fee of the contest you had winnings in? My situation is w/ FFPC season long league wins, but I assume that’s classified the same as DFS by the IRS – as a hobby. I entered multiple contests, paid about 2k in entry fees, cashed in three leagues for a total of $2200, withdrew 2k, and got a 1099-misc for 2k of income? Does that seem right?

  • FantasySultan

    Where can I find my net winnings/losses for the calendar year on Fanduel?

  • Pats7914

    • 74

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    • Ranked #98

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    FPPC terms of service state that they issue 1099’s if you have gross winnings above $600. Very possible they are doing it correctly and DK/FD aren’t and we are supposed to be paying taxes on gross DFS winnings.

  • LegiaWwa

    Are we likely waiting until Feb. 29 to get a Draft Kings 1099?

  • TheDataDetective

    • Blogger of the Month

    @FantasySultan said...

    Where can I find my net winnings/losses for the calendar year on Fanduel?

    You can’t, which is infuriating and makes the accuracy of their tax reporting even more dubious. On both FD and DK, certain types of bonuses are not included in the transaction histories that are downloadable.

    It would take about 10 lines of code for their developers to make this net profit available via the website and seems like an obvious feature to add.

  • Pats7914

    • 74

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    • Ranked #98

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    So do we have confirmation FD changed their formula for reporting tickets on taxes and didnt tell people in advance? That would be big time bs. Also FD satellites unplayable if that is the case going forward.

  • drewcrawford03

    • 2019 FanDuel FantaSea Finalist

    • 331

      RG Overall Ranking

    • 2018 FanDuel WFFC Finalist

    @Pats7914 said...

    So do we have confirmation FD changed their formula for reporting tickets on taxes and didnt tell people in advance? That would be big time bs. Also FD satellites unplayable if that is the case going forward.

    And also how do we challenge this since it’s not necessarily “income”?

  • Pats7914

    • 74

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    Not much recourse if that’s how they report it. FPPC is apparently not deducting any losing entries on their income reporting, Tax Act took away hobby loss deductions, and IRS (non-binding) guidance suggests we should have to pay on gross winnings and sites report it wrong anyways (well winnings less cost of winning entries, losing entries are just things we chose to spend income on in our hobby). Im facing a similar situation with a paypal 10K sent due to MA regs and think I just have to eat it. Schedule C the best bet, but has its own issues.

    Potentially a bad month for DFS between tax stuff and the potential NY ban. Hpefully just the standard FD fuckup

  • dictator_teddy

    • 450

      RG Overall Ranking

    • 2017 DraftKings FHWC Finalist

    Can someone please confirm with me if I am understanding this correctly, I am not sure what is going on.

    Scenario A: Let’s say I enter a $100 contest with cash, and double up and win $200. Is FD/DK calculating my net winnings as $100 or $200 in this scenario?

    Scenario B: Let’s say I enter a $100 Satellite that won a $200 ticket. I use the $200 ticket and I lose. I think the net winnings should be a ($100) loss. How does FD/DK calculate the net winnings here?

    Scenario C: Let’s say I enter a $100 Satellite that won a $200 ticket. I use the $200 and I win $500. I think the net winnings should be $400. How does FD/DK calculate the net winnings here?

  • cwilley

    • 227

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    @LegiaWwa said...

    Are we likely waiting until Feb. 29 to get a Draft Kings 1099?

    I was told today that they received an extension from the IRS and it will be 2-4 weeks.

  • Southie777

    I thought if you were getting a 1099 it would already be in your Document Center?

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @QuickInfo said...

    First, I think it’s awesome of you to answer questions here. One question arose from this answer, though. If the IRS requires the firms like DK to net out entry fees from their 1099, it makes little sense as to why other entry fees within DFS would be considered off-limits to deduct?

    The IRS does not require they do this. DraftKings and FanDuel have chosen to handle it this way (I assume based on professional guidance/advice they have received). What IRS “guidance” is out there suggests DraftKings and FanDuel may be doing it incorrectly.

    As players though, we want DraftKings and FanDuel to continue to do it the way they are doing it. If they did not report net winnings, it would be very bad for DFS players and DFS in general.

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @Southie777 said...

    I thought if you were getting a 1099 it would already be in your Document Center?

    DraftKings and FanDuel always request extensions. 1099’s typically are not available until late February/early March.

  • Southie777

    So, I’m confused. Am I reading this correctly that they are now only deducting entry fees from contests you won money in? Didn’t they used to always deduct all entry fees? So, is this a change for this year?

  • mciama2000

    According to the TurboTax website its all calculated as Net Winnings:

    https://turbotax.intuit.com/tax-tips/general/tax-considerations-for-fantasy-sports-fans/L75xYecdS

    But if they decide to start using gross, time to cash out and find a new hobby, would not be worth playing at all.

  • Pats7914

    • 74

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    • Ranked #98

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    Yeah, I mean, DFS would be done and we would all have massive back tax liabilities (including, and maybe even particularly, losing players) so that would be bad!

    DK not changing their formula this year last I checked with them on this, just FYI. FD hasnt said they are yet either. People should just be aware of the risks, there’s no IRS guidance that has blessed the way sites traditionally reported and, particularly post Tax Act, it leads to the status quo way being illogical on its face (i.e. can deduct losing entries within sites, but not across them) and potentially bad outcomes for players (IRS decides you owe on gross winnings-cost of winning entries). Also the 1099 doesnt make it the “right” way, its just the position DK has taken and the numbers will match with the IRS computer numbers if you report it that way.

  • drewcrawford03

    • 2019 FanDuel FantaSea Finalist

    • 331

      RG Overall Ranking

    • 2018 FanDuel WFFC Finalist

    @Pats7914 said...

    Yeah, I mean, DFS would be done and we would all have massive back tax liabilities (including, and maybe even particularly, losing players) so that would be bad!

    DK not changing their formula this year last I checked with them on this, just FYI. FD hasnt said they are yet either. People should just be aware of the risks, there’s no IRS guidance that has blessed the way sites traditionally reported and, particularly post Tax Act, it leads to the status quo way being illogical on its face (i.e. can deduct losing entries within sites, but not across them) and potentially bad outcomes for players (IRS decides you owe on gross winnings-cost of winning entries). Also the 1099 doesnt make it the “right” way, its just the position DK has taken and the numbers will match with the IRS computer numbers if you report it that way.

    And really that’s what matters. Your #s better match what the sites reported to the IRS.

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