Compliance March 14, 2007

Everybody’s into the Pool!

Odds are—no pun intended—you’ve been handed (or e-mailed) an NCAA Division 1 basketball grid this week.
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Yes, March Madness is in full swing—as are the attendant office pools. H&R Block notes that the amount wagered during the NCAA Basketball Tournament is second only to the National Football League season each year (citing Pregame.com). Meanwhile, none other than the NCAA itself reports that approximately a third (35%) of male college students (if true, I’m guessing that’s more a function of cash flow than interest) and 70% of adults have placed some sort of bet this past year.
According to the aptly named 2007 Office Betting Pools Survey by career publisher Vault Inc., more than three-quarters (79%) of employees said they participated in an office betting pool, up from 67% last year—and NCAA was the top-cited betting event in that pool, narrowly eclipsing the Super Bowl.
Win “Win?’
And yet, according to a 2007 H&R Block taxpayer survey, 57% of taxpayers said they would “not be very likely’ to report any winnings associated with the NCAA Basketball Tournament. Now, while that may be a function of the number not anticipating having winnings to report, that same survey found that only 35% of taxpayers were aware that any win resulting from gambling on the NCAA Basketball Tournament must be reported to the government.
While 52% of respondents to the Vault survey said they only spend $5 on these pools, and just 2% admitted to spending more than $50 to enter, the IRS is more interested in what you take from these endeavors(1).
There will almost certainly be more losers than winners in these pools, of course. The good news is that those who itemize deductions on Schedule A can deduct gambling losses. The bad news is that those can be deducted only up to the amount of winnings reported on the return.
However, winning may be the least of your worries. The laws vary widely from state to state, but even friendly office pools can run afoul of state laws. Consider that bills have just been introduced in Wisconsin (where currently any kind of gambling is illegal except in state-sanctioned settings such as the lottery, tribal casinos, and church bingo parlors) and Michigan (where currently placing as little as $5 in a pool could land you a $1,000 fine or a year in jail) that would remove that cloud—but not in time for this year’s tournament.
Not that anyone—law enforcement officials included—appears to be inclined to pursue such “violations.’
(1) H&R Block notes that gambling institutions generally are required to withhold federal income tax on winnings exceeding $5,000 at 25%, but gamblers who refuse to provide a Social Security number and those who win big in an office pick “em pool may be required to pay 28% of winnings over $600. If you win more than $600, you should get a W-2G, but even if you win a small amount, you are still responsible for reporting winnings on Form 1040 (and don’t forget those state taxes—maybe both where you won, and where you live).
Products March 14, 2007

MG Advisory to Offer Managed Accounts on ExpertPlan Platform

MG Advisory Services, a wholly owned subsidiary of Matrix Settlement&Clearance Services (Matrix), has announced an alliance with ExpertPlan that will make MG Advisory's Individually Managed Account (IMA) product available on the ExpertPlan platform.
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Through the alliance, money managers from firms such as Flexible Plan, Portfolio Strategies, CLS Investment, and Legend Advisory will now be available to ExpertPlan participants as part of their retirement package options.

The IMA product is designed for its recordkeeping customers who have their own recordkeeping systems and clear mutual fund trades with Matrix but, now that is it available through ExpertPlan’s private-label platform, MG Advisory’s IMAs are available to TPAs regardless if they own a system or clear through Matrix.

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