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$550 MILLION: Mega Millions holiday bonanza!

Topic closed. 220 replies. Last post 3 years ago by Viking Orayk.

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LottoLucy's avatar - hereslucy header.jpg

United States
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August 14, 2012
171 Posts
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Posted: December 16, 2013, 1:59 pm - IP Logged

You're welcome. 

One way to get around it is to split it at the beginning with family, if your state allows it, have the lottery commision write you folks multiple smaller checks instead of the big one.

In my state of Texas we are not allowed to do this as they have the one claimant per ticket rule, but there is a loophole. You may enter into a legally binding lottery pool (entity) with family and friends and have the document with all the members names and signatures notarized. This must be done before you buy your ticket(s).

or...

Just don't go over the annual limits of $14,000 per person if you are single or $28,000 ($14,000 from each) if you are a married couple. If you and your spouse each give 100 people $14,000 each, you could easily give $2.8 Million away a year and not take the tax hit.

Good advice to enter into an agreement BEFORE the drawing if you want to give shares of your win to family and friends.  You have to be able to prove to the IRS that there was an agreement in place BEFORE the drawing to split any winnings.  The have been multiple court cases where the IRS sued the winner for gift tax, and in some cases won, because the person could not prove conclusively that there was an agreement to share before the drawing.  If you gve shares after the drawing that it considered a cash gift and is subject to gift tax.

I have been told that the IRS looks particularly hard at winners who split a jackpot between more than husband and wife (no gift tax between spouses unless one of you is not a US citizen).

If you don't have an agreement you can give away $5.34 in 2014 before any gift tax kicks in if you don't mind using your lifetime exclusion. That is still a lot of money to share!

Lotto Lucy

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    Portland, OR
    United States
    Member #145973
    August 20, 2013
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    Posted: December 16, 2013, 2:06 pm - IP Logged

    Those who care about the IRS/law, follow the law, report the over the limit payments and pay the needed taxes.  Those who don't care about the law, take money out of their bank accounts, give the cash to their families with a note to hide it under the mattress or they'll pay most of it in taxes, and that's it.  The latter would claim they blew it all at indian casinos and partying, if anything comes of it, which I serioulsy doubt.  I seriously doubt the cat has a fifth leg.

    "Understand... people are more complicated than the masks they wear in society... everyone is playing to win, and some people will use moral justifications to advance their side"

                                                                                                                                                              Robert Greene

      TheGameGrl's avatar - character catafly.jpg
      A long and winding road
      United States
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      June 10, 2005
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      Posted: December 16, 2013, 2:15 pm - IP Logged

      Good advice to enter into an agreement BEFORE the drawing if you want to give shares of your win to family and friends.  You have to be able to prove to the IRS that there was an agreement in place BEFORE the drawing to split any winnings.  The have been multiple court cases where the IRS sued the winner for gift tax, and in some cases won, because the person could not prove conclusively that there was an agreement to share before the drawing.  If you gve shares after the drawing that it considered a cash gift and is subject to gift tax.

      I have been told that the IRS looks particularly hard at winners who split a jackpot between more than husband and wife (no gift tax between spouses unless one of you is not a US citizen).

      If you don't have an agreement you can give away $5.34 in 2014 before any gift tax kicks in if you don't mind using your lifetime exclusion. That is still a lot of money to share!

      Inaccurate advisal.

      State Lotteries allow more then one claimant on ticket wins. Its a Primary contact and all others are listed with percentage amounts . The IRS does NOT force a winner to show proof prior to the win date that an agreement was in place. The winners need only show the win form and all members as listed.

      Consult with a tax attorney for proper administrations of any gifted funds....

      ~~Is it true, Is it kind,Is it necessary. ~~~

       Thanks be to the giving numbers: 1621,912,119 02014

        mightwin's avatar - questns

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        January 5, 2011
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        Posted: December 16, 2013, 2:27 pm - IP Logged

        Raised! $586 mil

          Viking Orayk's avatar - DiscoBallGlowing
          New Member
          Tennessee
          United States
          Member #149627
          December 5, 2013
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          Posted: December 16, 2013, 2:28 pm - IP Logged

          Are these limits for straight cash gifts?  What if you pay off their student loans, mortgages, credit card bills, etc.?

          I Agree!

          This would be my thought..... to help out family and friends, buy or start a business,   with them on the payroll and give them "perks" like CEO have.

          "Corporate"...education, trips, condos, cars, retirement and health benefits.

          max out whatever tax benefits that you can from the business.

          Corporate bigwigs makes as much if not more on the perks and benefits, then they do from the paycheck.

          Over the years with the companies that I have work for, I have seen a lot of "Deadwood" on the payroll balance sheet !! some even put their time in

          at the office...... but most were paid to stay away.(owner's wife, brothers, sister)

          With the jackpot this BIG"..... you'll need a few tax write offs. US Flag

          I'm renting ($1) my dream until the drawing, hoping my "long shot" comes in!!

                                                         Bed

          integrity is doing what's right........ when nobody's watching"

            dpoly1's avatar - driver
            PA
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            October 16, 2008
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            Posted: December 16, 2013, 2:38 pm - IP Logged

            The Jackpot is growing!

            Noel

            dpoly1 - Playing the lottery to save the jobs of those that build, transport, sell & maintain luxury items! -

             

            Eschew Poverty ........... Vote Conservative!

              Advice's avatar - Lottery-014.jpg
              New Member

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              December 16, 2013
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              Posted: December 16, 2013, 2:39 pm - IP Logged

              Well that sucks. I just got my Masters degree and can't Find work in my field. My friends are struggling as well I was gonna pay off their student loans if I won

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                United States
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                May 22, 2012
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                Posted: December 16, 2013, 2:48 pm - IP Logged

                Bigger jackpot now, should hit $600 mil before the drawing tomorrow.

                The lottery is NOT a tax on the poor.  By calling it a tax, you are calling it mandatory, which is what taxes are.  But the lottery is NOT mandatory, therefore calling it a tax highly inaccurate.

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                  NY
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                  Member #23835
                  October 16, 2005
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                  Posted: December 16, 2013, 3:37 pm - IP Logged

                  I just heard on the radio that this jackpot could set a new record when MUSL issures a jackpot update later today which could be well over $600M.

                  Wait 8 days and you may hear that Santa was seen over northern Ohio. The advertised jackpot has to go over $656 million before MM officials will claim they've set a new record. Based on the curent cash/annuity ratio it needs to be over $878 million to set a real record. It will take some serious hysteria for that to happen by tomorrow night.

                    Avatar
                    NY
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                    October 16, 2005
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                    Posted: December 16, 2013, 3:45 pm - IP Logged

                    Valuable info, thank you.  So if you go around thinking you can make all your family and many of your friends millionaires themselves, you end up with a whacking big tax bill the next year?  What's the best way around this? Or how to minimize the tax hit?

                    You can give as many gifts valued at $14,000 or less as you want to. Until the drawing, any ticket you buy is worth a lot less than that, so all you have to do is give people shares in the ticket(s). Of course the IRS is going to want proof, so you'll need to be able to document the gift.

                    The IRS might be fussy, but I know there have been at least a couple of cases where judges were more cooperative about accepting whatever proof  winners were able to offer. Figuring the majority of winners  don't set up trusts, partnerships, or corporations before winning I'll *assume* that those winners had nothing that was 100% conclusive, and that an affidavit describing the gifts you will make as soon as you purchase the ticket(s) is likely to suffice.

                      VFR95's avatar - Lottery-030.jpg
                      Whetstone
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                      February 15, 2013
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                      Posted: December 16, 2013, 3:46 pm - IP Logged

                      It might not break the record by tomorrow, but I'm sure it will, come this Friday for Sure.

                       

                      I predict it'll be over the Billion Dollar mark on or about time for the Christmas Eve drawing.

                       

                      Dreamer,

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                        NY
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                        Posted: December 16, 2013, 3:47 pm - IP Logged

                        Are these limits for straight cash gifts?  What if you pay off their student loans, mortgages, credit card bills, etc.?

                        A gift is a gift. I've never had occasion to  find out, but since you can pay for somebody's medical and educational expenses without incurring a gift tax it's possible that you can also pay off loans for medical and educational expenses.

                          helpmewin's avatar - dandy
                          u$a
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                          February 22, 2011
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                          Posted: December 16, 2013, 3:50 pm - IP Logged

                          The Jackpot is growing!

                          Noel

                          I Agree!

                          Let it Snow Snowman

                            LottoLucy's avatar - hereslucy header.jpg

                            United States
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                            August 14, 2012
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                            Posted: December 16, 2013, 4:25 pm - IP Logged

                            First of all it isn't accurate that all state lotteries will allow multiple claimants.

                            I stand by what I said.  The most recent case is Dickerson v Commissioner where a Waffle House waitress was given a lottery ticket as a gift before the drawing (so the value of the gift was the price of the ticket), that ticket won, and she turned around and tried to split the ticket with family members giving herself 49% share.  They formed a corporation to share the ticket.  The court found there was no proof that there was any agreement in place before the drawing that the members would share any lottery wins and she ended up getting a bill for gift tax.  The tax court used criteria such as if there was a requirement that each family member buy lottery tickets, was there a pattern to purchases, and was there a predetermined formula used to determine the percentage each person received.

                             
                            Another case was Estate of Winkler v. Commissioner.   Several years ago a family tried to share a lottery win.  The IRS went after the purchaser of the ticket for the gift tax.  In that case the court found that the family did have an agreement in place ( they would buy tickets and put them in a glass bowl at the parent's house if I remember correctly) and the IRS was denied the collection. 
                             
                            I do agree that if you are lucky enough to win you should hire a good tax and estate planning attorney.

                            Lotto Lucy

                              Jon D's avatar - calotterylogo
                              Los Angeles, California
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                              Posted: December 16, 2013, 4:26 pm - IP Logged

                              Inaccurate advisal.

                              State Lotteries allow more then one claimant on ticket wins. Its a Primary contact and all others are listed with percentage amounts . The IRS does NOT force a winner to show proof prior to the win date that an agreement was in place. The winners need only show the win form and all members as listed.

                              Consult with a tax attorney for proper administrations of any gifted funds....

                              Right. Group wins don't require formal agreements before buying the ticket. It's nice, but not required.

                              In single payee states, they can form a partnership for the group, after the win, but before the claim, so each person can get his own share of the winnings.

                              Other states like CA will do multiple payee for group ownership claims, partnership not needed.

                                 
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