The Garden City Group (GCG), a company recruited by the US Department of Justice (DoJ) to deal with Full Tilt Poker (FTP) claims, began sending email notifications to eligible FTP victims on September 16, giving them detailed instructions on how they can file their claims. But several FTP victims are worried about how the refunds will impact their taxes.

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Recently, Card Player interviewed Russell Fox, a gambling tax expert associated with the Las Vegas based Clayton Financial and Tax, and got his opinions about it. When Steve Schult of Card Player asked Fox if the FTP refunds will be considered income to be taxed, Fox said that it will be taxable income for some players, but not for all. He referred to it as an “it depends” situation.

Explaining the concept of “constructive receipt,” he said: “If there is substantial doubt on your ability to collect money, then you don’t have constructive receipt. As with Full Tilt, as of December 31, 2011, there was more than substantial doubt. There was tremendous doubt that we would ever see anything. So as of 2011, there was no constructive receipt. Even today we still do not have constructive receipt. We know that the money is going to come, at least we think 100 percent of it, but it hasn’t come yet and it’s more likely in my view to come in 2014 than in 2013. So until that money actually shows it, it’s not income.”

When Schultz asked about players who blew up a considerable portion of their deposits playing poker and now have some money left in their accounts, Fox said that gambling taxes are calculated differently for professional poker players and amateurs. Professional poker players are expected to record their wins and losses carefully. Ultimately, if a pro has won $50,000 and lost $30,000, he/she will have to pay taxes on $20,000. On the other hand amateur poker players are required to report wins and losses separately on form 1040. If an amateur loses $30,000, it will be deducted on schedule A and he/she will have to pay taxes only on the winnings.

He also said that players will not be able to write off frozen FTP funds as gambling losses because the tax codes has clearly defined what it means by the term “wagering.” Frozen funds are not “gambling losses” because they not lost through gambling, but were lost because the online poker room shut down.

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