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January 28, 2023

Your Fantasy Football Results Might Have a Few Tax Consequences, Tough Guy

Face it. Fantasy football is Dungeons & Dragons for people who used to beat up people who played Dungeons & Dragons.

Now I don't think there was much crossover between future accountants and D&D enthusiasts in high school, but I do think they all sat at the same lunch table.

But now those jocks — the ones who said you were gay and stripped you naked in the locker room and snapped you with wet towels to demonstrate that they weren't gay — are spending an estimated $15 billion on a hobby that's pretty gay.1

32 million Americans spend $467 per person, or about $15 billion in total, playing [fantasy sports].

Of the 32 million who play fantasy sports, only about 6 million are women. It’s like the Beach Boys song “Two Girls For Every Boy,”2 just boys and girls are reversed and the gender disparity is increased by a factor of 2.17.

The thing that makes fantasy football a real man’s game of play pretend is the money.3 If you’re competing in a prize league, you could win anywhere from $200 to $5,000. And if you’re making cash like that, you’ve got to include it on your 1040. But many fantasy sports enthusiasts don’t know how because taxes are hard. Who’s wishing they hadn’t snapped me with a wet towel now?

Two formerly naked and towel-snapped CPAs wrote a post for the AICPA about how to properly report fantasy sports related income and expenses. And, man, you won’t believe how much it’s exactly like reporting income and expenses from any other activity.

The main issue is whether or not taxpayers “are actively involved in fantasy sports leagues to the extent that their activities rise to the level of a trade or business.”

Although the Code and the Regulations do not provide a definition, the Internal Revenue Service has defined "trade or business" as “an activity carried on for livelihood or for profit. For an activity to be considered a business, a profit motive must be present and some type of economic activity must be involved. It is distinguished from an activity engaged in purely for personal satisfaction.

If fantasy football provides you with your livelihood, not only do you have to report your revenue and expenses on Schedule C, you should also consider paying your mom some rent for her basement.

But clearly, the main tax consequence of playing fantasy football is the high probability of your filing status being "single."

1Men who are constantly in search of men who perform better than the men they already have. Sounds a little gay.
2Relax, Stamos. The song’s actually “Surf City” by Jan & Dean.
3Any man’s man knows that engaging in an activity purely for personal satisfaction is for pansy little bitches.

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