Sunday, September 04, 2005
HELLMUTH'S HOLD 'EM
Let's make a deal? That's not my style
With about six players left in the $5,000 buy-in championship event at Harrah's ''Carnavale of Poker'' in January 2000, 1999 Card Player magazine ''Player of the Year'' Hieu ''Tony'' Ma whispered to me, ``Phil, how sweet is it for you that this Frenchman keeps moving all-in pre-flop. You're going to bust him for sure!''
At the time I smiled and nodded at Tony; I too believed that Angelo ''The Frenchman'' Besnainou's chips were mine to win. I love to play against a ''slider'' (someone who moves all his chips into the middle, regardless of blind size), because once they do slide it all in, they can't fold when I eventually pick up a powerful hand behind them.
So when the tournament came down to Farzad ''Freddy'' Bonyadi, the Frenchman and me, and the two of them asked me to make a deal (deals are common in all tournaments near the end), I told the Frenchman, ``No deal.''
His proposal was that we would take about $200,000 apiece off the top (I had more chips and stood to receive $250,000), and play for $100,000 for first, rather than for the scheduled $400,000 for first, $200,000 for second and $100,000 for third.
From the ''I want the title'' perspective, I said no to the deal for three reasons: First, I knew that if I played for all the money, I would stay hyper-focused. Second, I feel that some players give away more tells when playing for it all, owing to the extreme money pressure that that presents, thus enhancing my already good ''read'' on my shorthanded opponents. Third, big pressure often forces big mistakes, from almost any player.
At this point, I had about $440,000 in chips and a lot of momentum. I was just starting to take control of the tournament when the Frenchman moved all-in for about the 25th time at the final table. I looked down at Ad-Qd and decided to call his $222,000 bet. Bonyadi proceeded to fold, and our hands were turned face up. The Frenchman had Ac-6h, about what I expected, and I knew that I was about a 2 ½-to-1 favorite to win the pot. The flop was A-5-5, which was not a bad flop for me, because it put no six on the board, but of course I would have preferred a queen on the flop to lock it up for me. Besnainou would need a six to win or a king to tie. The turn card was his miracle six, but I figured that a queen would be coming on the river -- for me to win as I should have, mathematically speaking. The river proved to be a seven, though, and I lost the $460,000 pot.
Two hands after I lost with that Ad-Qd, the Frenchman slid all-in and I called him for about $200,000 with A-10. He had K-J (I was a 3-to-2 favorite), and the flop came down J-Q-6, but then an ace came off on the turn to give me a big lead in the hand, and a lot of hope.
At this point Besnainou would need a king or a 10 to win (the deck still held two kings and three 10s), and he was an 8-to-1 underdog. Some days the river runs swiftly in no-limit Hold 'Em, and an unwanted 10 came off -- to give me two pair and him an ace-high straight, with a final board of J-Q-6-A-10. By the way, this was one of those weird hands that are fun to watch, but difficult to be involved in, where there was a different leader on every street.
I had him before the flop, he had me on the flop, I had him on fourth street, and he had me on the river.
Being eliminated by two ''bad beats'' in short order seems to be the classic situation where I (the Poker Brat!) throw a temper tantrum, or at least berate my opponent a little bit, but not this time. I just said ''nice hand,'' wished the players good luck, collected my money and left. In other words, I did what I was supposed to do all those other times in the past when I was eliminated from poker tournaments; I acted like a champion -- with class -- and went home.
Phil Hellmuth is a nine-time World Series of Poker champion and the author of Play Poker like the Pros and Bad Beats and Lucky Draws (both published by HarperCollins). His column appears Sundays in Tropical Life.
IRS wants to be sure it's a winner at poker
Game's popularity leads agency to seek new withholding rules for tourney events.
As gambling in general and poker in particular spread across the land, here's some advice for neophytes: Not only do you gotta know when to hold 'em and fold 'em, you gotta know how to put it all on your tax return.
Gambling winnings are taxable income. But gambling losses, as many people don't know, aren't necessarily deductible. And the widely held assumption that you simply subtract your losses from your winnings and report only the net income, if any, is not the way it works.
In fact, the taxation of gambling -- or "gaming," as the Internal Revenue Service calls it -- is structured in an unusual "heads the government wins, tails the taxpayer loses" way. Because of that, a person who loses as much as he wins sometimes can end up owing higher taxes.
One of the few things going in the gambler's favor, at least until recently, is the difficulty the IRS has in tracking that income. Now the agency wants to change that.
"It's time to take a look at poker, which has become very, very popular, and see what sort of guidance we need to be starting here," said IRS Chief Counsel Donald L. Korb.
The first step, he said, will be to work out an improved system of withholding rules covering poker tournaments.
How it works now
Right now, the agency's reporting rules are not designed with poker in mind.
In general, IRS rules specify that the payer of your winnings must send you a Form W-2G only if you win $600 ($1,200 from bingo and slot machines, and $1,500 from keno) or more and your winnings are at least 300 times the amount of the wager.
In addition, if you win more than $5,000, the payer may be required to withhold 25 percent of the total -- and if you don't give your Social Security number to the payer, withholding is 28 percent. The IRS needs to decide, among other things, where poker tournaments fit in this scheme.
The current rules work well for horse racing, lotteries and similar high-payoff games, but "I can't imagine an instance where you would get (a W-2G) from poker," said New York accountant Jeffrey Kelson.
Because the payer doesn't report the income doesn't mean the gambler doesn't have to. Kelson said he has found the IRS increasingly doing "root canal" audits in which the taxpayer is required to account for every bank deposit. This and other tactics enable the IRS "to stumble over your gambling winnings," he said.
So if you win and want to avoid trouble, you'd better include the money on your return.
In 2002, the most recent year for which figures are available, 1.5 million taxpayers reported total winnings of $18.7 billion, while 906,000 taxpayers reported $11.8 billion in losses.
IRS rules require you to report both -- not the net after subtracting your losses or other costs, but all of it. You put the winnings on a specific line on the front of Form 1040 -- it was line 21, "other income," for 2004 returns -- and that results in your total winnings being included in your gross income, and ultimately your adjusted gross income. You enter your losses separately as a miscellaneous deduction on Schedule A.
Limits apply
This arrangement has several unhappy consequences.
First, if you don't itemize deductions, you pay tax on all the winnings and get no offsetting write-off from your losses. This can hurt relatively low-income people who would normally take the standard deduction.
Second, if you do itemize, you can deduct losses or other costs only up to your winnings. If you lost more than you won, you get no tax help. You can write off associated costs, such as admission to gambling establishments, food and lodging, but they are subject to the same limit.
Third, even if you do itemize and have enough losses to wipe out the tax on winnings, those winnings may serve to inflate your adjusted gross income because the winnings get added in early in your calculations but the losses do not figure in until later.
Finally, gambling losses are subject to IRS challenge, just as any deduction is. While the payer may report your winnings, it is not likely to report your losses. So keep good records.
