WSOP 2008

[harry_bierdop]

75%

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Final Nine Collectively Owe about $14.7 million in Taxes

The tax monsters that help feed governments from all around the globe feasted heavily on the World Series of Poker main event's final table participants. Out of the $32,731,585 collected prize pool that was distributed to the final nine players, about $14,793,416 went to governments from around the world.

Russ Fox, and Enrolled Accountant who works for Clayton Financial and Tax of Irvine, Calif., crunched the tax numbers for all the final table participants, according to where they are from. The following is his work, which could be found at his blog, which covers all sorts of tax issues at <!-- w --><a class="postlink" target="_blank" href="http://www.taxabletalk.com">www.taxabletalk.com</a><!-- w -->.

The following figures assume that the players will pay exactly what the tax code in their countries and regions call for. The figures could change drastically, depending on the player’s accountants, the success of challenges, and other factors.

By far, the person losing the most through taxes is the winner of the main event, Peter Eastgate. Denmark puts a severe tax burden on those who win big at casinos. For casino wins, Danes owe their government 45 percent on the first 4 million Danish Kroners won and that figure jumps to around 75 percent on anything above that. A $1 is worth about 5.8 Kroners, meaning Eastgate's $9.1 million first-place prize falls easily into the higher rate.

Assuming Eastgate is subject to Danish taxation laws, he is looking at a tax bill of around $6.6 million. But Eastgate recently moved to London and because of that, may not owe a penny. The UK doesn't tax poker winnings. But because Eastgate just made the move to London, Denmark's tax agency, called SKAT, will claim that he moved to avoid the incredibly high tax rate. Fox predicts that somewhere down the line, unless Eastgate simply ups and pays Denmark, both parties will wind up facing an arbitrator in a tax hearing to figure out how much the 22-year-old Dane owes.

If Denmark winds up with Eastgate’s tax dollars, Eastgate will get to keep only $2,491,871 of the $9.1 million paid to first.

Second-place WSOP finisher Ivan Demidov won $5.8 million, and according to Fox (and thanks to a Russian flat tax rate of 13 percent), he gets off fairly cheap with a $755,247 tax bill.

Dennis Phillips, of Illinois, finished third and won $4.5 million. He will owe about $1.6 million to the IRS and $135,000 to the Illinois Department of Revenue.

Another American, Ylon Schwartz of Brooklyn, finished fourth and he won $3.7 million. According to Fox, since he is a professional gambler, he’ll owe self-employment taxes on his winnings, as well as state and New York City income tax. He’ll probably owe $1.39 million to the IRS and $387,966 to NYC.

Two Canadians then finished fifth and sixth: Scott Montgomery of Perth, Ontario and Darus Suharto of Toronto. The tax treaty between the U.S. and Canada calls for 30 percent of the prize money to be withheld by the IRS.

That puts Montgomery’s IRS bill at $929,000 (for winning $3,096,768) and Suharto’s at $725,569 (for winning $2,418,562). Montgomery will owe about $491,000 more to his provincial government.

Finishing sixth and seventh were two Californians. They not only will get a bill from the IRS, but also from California’s tax agency, the Franchise Tax Board (FTB). David Rheem earned about $1.7 million for his seventh-place finish and will owe about $651,262 to the IRS and $170,302 to the FTB.

Kelly Kim finished in eighth place and owes about $470,995 to the IRS and $121,074 to the FTB.

Craig Marquis took a rotten beat to be eliminated first, and earned $900,670, of which $328,911 will go to the IRS.