Talk:Baxter v. United States

General comments
This is going to need some work. There are some dubious statements in the article. First, much of the material on the legal status of the case is cited to an article. The actual text of the court decision tells a different story.

This statement:


 * William E. Baxter Jr. v. United States was a 1986 court case that provided that poker players could file their income taxes as professionals, and thus have their earnings treated not as unearned income but rather as earned income.

--This is partially correct. The court specifically did NOT rule that poker players could file their income taxes as professionals -- indeed, that was not even an issue in the case. In fact, the court specifically stated that the parties did not dispute the fact that Baxter was a "professional gambler." (In legal parlance, that means that whether he was a professional gambler was not an issue presented to the court, and was not an issue decided by the court.)

I will be looking at the text of the court's decision in more depth later. The article does not actually state what the court really ruled in the case.

The quote on the judge is not found in the actual text of the court's decision. The quote appears to be something that the judge may have stated in open court -- but it's not in the actual written court decision.

Despite the statement in the article that the Court of Appeals upheld the trial court, a preliminary check shows no record of any appeal of this case to the Ninth Circuit Court of Appeals. However, I need to do more checking on that.

Part of the problem with the article is that it cites only to secondary sources, without reference to the actual text of the court's decision in the case. Normally in Wikipedia, secondary sources (e.g., articles) are preferred over primary sources (e.g., the actual text of the court decision). However, this policy can lead to accuracy problems, and I think we have some of those problems here.

Stay tuned. Famspear (talk) 19:15, 6 March 2008 (UTC)


 * OK, I've made a start. I've added some material from the court case itself. I have not deleted much of the secondary source material. If it turns out that we cannot locate a record of the appeal of this case, we will deal with that issue separately.


 * The actual tax law issues presented to the court and decided by the court are a bit more complex than I have shown them. More work on this later, hopefully, when I have time. Famspear (talk) 19:48, 6 March 2008 (UTC)

The write-up of this case as presented here muddies the waters over what the case really decided. The issue was whether Baxter was engaged in a trade or business such that he could deduct expenses and gambling losses "above the line" (i.e. as part of AGI) instead of gambling losses as a miscellaneous itemized deduction and no deduction for indirect expenses, and be subject to the (then) maximum tax rate of 50% for personal service vs. 70% for other types of income. Gambling income itself is ALWAYS "earned income" (but not qualifying for EIC within the meaning of the current IRC Section 32) because it shares these characteristics in common with compensation of services: 1)  The "work" performed is performed directly by the person (i.e. he expends time and demonstrates skill directly).  2)  There is an amount "at risk" which the taxpayer may lose if not successful in the activity. 3) With both gambling and physical labor, one "sweats" when performing the activity.  This is further recognized by the IRS information return document being the W-2G, part of the W-2 series and not the 1099 series.  Furthermore, not all business-like activities are actually businesses (cf. IRC Section 183), so this was a dispute over whether the activity was a business, but such does not imply that non-business gambling income cannot also be "earned income." Hobby income (as non-business income) is also exempt from FICA (the self-employment version of the tax), although it does yield a (limited) miscellaneous itemized deduction (subject to the 2% of AGI floor) for indirect expenses that gamblers do not get. 71.106.210.230 (talk) 07:03, 18 October 2010 (UTC)

Suggestion on further content
I divided the article into sections to delineate certain areas. I think a history section with content on the history of gambling winnings and their taxability would be pertinent to add further context to the article's topic.EECavazos (talk) 17:10, 11 May 2008 (UTC)

Assessment comment
Substituted at 09:15, 29 April 2016 (UTC)