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I need advice as to what would be the best-perceived corporate structure for a gambling entity: sole person LLC or S Corporation. I am a sports bettor; I live in Las Vegas, NV. I only bet on NBA games, thus the months I make money are November thru April. I make upwards of high six figures; however this year, I’m looking to make seven figures. I have not declared myself as a professional yet as I still need to weight the pro’s/con’s of doing so. (Going pro seems to have the obvious advantages of writing off expenses etc.), However, everything I’ve read regarding the IRS and gambling seems to be a nightmare.

This is my sole occupation, I quit my day job a year ago to focus on sports betting and made more money in 6 months than in the past 15 years of my life, so naturally, I won’t ever go back to working for someone else.

I did not file taxes on last season winnings as I’ve received conflicting advice (particularly regarding self-employment taxes). I have all my documentation to support my winnings should I file as a professional gambler.

I’m not trying to avoid paying taxes, I just don’t want my tax bill to eat up all my winnings due to not being fully aware of tax strategies to someone in my position.

migrated from answers.onstartups.com Sep 11 '13 at 19:17

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I did not file taxes on last season winnings as I’ve received conflicting advise (particularly regarding self-employment taxes). I have all my documentation to support my winnings should I file as a professional gambler.

Oh dear.

Get a GOOD tax adviser (licensed as EA, CPA or Attorney in Nevada) who's specializing in providing services to people like you and have it resolved ASAP. You're in major non-compliance. If you earned by gambling more than you earned by working in years, and you haven't reported that on your taxes - you may very well find yourself in jail.

As to your original question - why on earth would you have a corporation for gambling? Or LLC... Why? What's the liability that you want to shield yourself of? It's your money that you're risking, and the risk is that you lose it, how is LLC or Corp going to help you in any way?

Gambling winnings are reported as miscellaneous income (whether you're professional or just got lucky once with a slot machine - no matter), and if you're a pro (and it sounds like that since you're doing it systematically and in order to make profits), then yes, you pay SE taxes on it. Whoever told you anything else told you to break the law. Which you did, unfortunately.

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    Good answer. I saw the section you highlighted (about not paying taxes), and I hoped someone had reacted strongly to it. Not paying taxes on income in the high six figures is a terrible idea. – John Bensin Sep 11 '13 at 19:37