Question for anyone knowledgeable about Massachusetts tax law:
Supposedly for Massachusetts tax purposes, "actual winnings" from anywhere count as gambling income, and losses do not offset these, except for expenses incurred in buying a winning Mass. state lottery ticket.
What are "actual winnings" in a cash-style poker session?
Massachusetts resident (who likes to play poker and does not like to cheat on taxes) goes to a casino out of state, buys $100 in chips.
Plays poker, and all hands are folded except three:
Hand A: posted $1 required blind (rotating ante), bet $9 additional, won $30 pot -- net = plus $20 for the hand (or net = plus $21 not counting the required blind).
Hand B: bet $80 and lost -- net = minus $80 for the hand.
Hand C: bet $40 and won $120 pot -- net = plus $80 for the hand
Five other hands had a required blind (rotating ante) of $1 each -- net minus $5.
(Tipped dealer using cash rather than chips, to keep things simple.)
Cash-out $115 in chips.
Gain for the poker session is $15.
Net for the poker session if the required blinds do not count as part of the betting is $21.
Total of pots won is $150.
Total net only counting winning hands is $100, if required blind is counted as part of the bet.
Total net only counting winning hands is $101, if required blind is not counted as part of the bet.
Under Mass. tax law -- is this $15 in gambling winnings; $21 in gambling winnings; $150 in gambling winnings; $100 in gambling winnings; $101 in gambling winnings; or ambiguous depending on how "actual winnings" is interpreted?
It would seem conceivable that if a state considers cash-style poker to be a vice that it is dead-set on discouraging, it might want to tax every pot won or every hand won rather than the net on the session. And as long as it is only state tax and the purpose of playing is for fun, the "extra rake" on each hand won would not be a killer. The killer would be trying to keep track of every damn hand's winnings; as opposed to just keeping track of total buyin for the day and total cash-out for the day.
Two Massachusetts residents sit at an out-of-state poker table and pass the same $50 back-and-forth 20 times. Does Massachusetts consider this to be $1,000 in gambling income for each of them?
Fine, this is a stupid question. But if anybody knows the answer, I would be interested. Thanks.