I may be asking a dumb question but here it goes.....
Why would his winnings ($800,000) be taxed at all since the payout was not 300 times the initial investment ($100,000).
Lets say you bang a $2.00 trifecta that pays $400. That is tax free. I know that if you hit a $2 triple that pays $1500 you get a 1099 G. Since it was more than 300 times the in vestment.
I can see the initial prize of $100,000 being taxed as money won in a contest (1099 tax form) but not the winnings from the race itself
Lets say a bridge jumper with a lot of cash bets $500.000 to show on a clear and heavy favorite. He gets his 10% return $50,000 ($2.20 to show) that profit is tax free.
If I am wrong would someone please correct me
Thanks
I may be asking a dumb question but here it goes.....
Why would his winnings ($800,000) be taxed at all since the payout was not 300 times the initial investment ($100,000).
Lets say you bang a $2.00 trifecta that pays $400. That is tax free. I know that if you hit a $2 triple that pays $1500 you get a 1099 G. Since it was more than 300 times the in vestment.
I can see the initial prize of $100,000 being taxed as money won in a contest (1099 tax form) but not the winnings from the race itself
Lets say a bridge jumper with a lot of cash bets $500.000 to show on a clear and heavy favorite. He gets his 10% return $50,000 ($2.20 to show) that profit is tax free.
If I am wrong would someone please correct me
Thanks
Lets go a bit deaper and play the devil here.
If his horse lost he would still be on the hook for the taxes due on the prize of $100.000. After all he "won" the money in a contest and is there for responsible for the tax due on that prize.
Just like the lucky soul who puts in max coins at their favorite joint and wins that super shiny sports car. You bet they are responsible for the tax on that new car
I can't see a losing wager paying taxes at all. He didn't have the choice to take $100,000 home with him. The money was never his. He won the right to risk someone else's $100,000 and then collect if he won. I don't think he can be taxed when he never had the possibility of taking $100,000.