Why is it beneficial to collect a lottery jackpot as a LLC?

Reply #38

cc63 — Thu, 12 Jun 2008 06:07:02 GMT

I may be missing something here, but as far as claiming a ticket as an LLC, LLP, LP, my guess is that you wind up paying as much as 15% more in taxes, as all income derived from such entities are subject to self employment taxes. I could be wrong.

An alternative might be an S corp, where you only have to declare a reasonable salary that is subject to SE taxes. If a corporations sole purpose was to play the lottery, that salary migh be what, $1000? All other income is reported (passed through

Reply #37

river1 — Thu, 29 May 2008 03:23:07 GMT

i believe an email will stand up in court, otherwise why did W's Whitehouse delete all theirs? emails are also dated, which would predate the drawing so i think i'm covered.

of course a powerball jackpot of 25 million has an annuity pretax payout of 450 thousand so why would you take the cash.

later jim

Reply #36

MeFirstYouLast — Fri, 23 May 2008 20:41:39 GMT

Psykomo: You are one of the few people on the planet who can make me speechless. I never know how to respond to your inputs. Your are unique

Reply #35

Sandra Dee — Fri, 23 May 2008 13:57:43 GMT

absolutely .......... wait for it ...... wait for it .......... NOT!! I usually come back with a mini epileptic seizure type syndrome after reading one of your posts!! the letters are hella fat [that's not going to work for me] then the words, just stop then continue and then bang, a sentence [?] - while I'm flattered, I already have a knucklehead at home .. but if I should be in-between marriages and YOU'VE won, then I'll gladly call you

Reply #34

psykomo — Fri, 23 May 2008 03:02:23 GMT

SD ..........UR ..........( SO SWEET !!!!!!!!!) ?

Correction ............U sound so sweet !!

let's HIT the Mega or Power ball JACKPOT !

ASAP SHARE the MONY$$

YOU FIR$T $$LOL$$ !!!!

PSYKOMO

Reply #33

MeFirstYouLast — Wed, 21 May 2008 22:16:35 GMT

In America, in the year 2008, there is no reason not to know everything you want to know about everything yoy want to know. If you don't know how to handle money, then it is because you are too lazy to learn. There are hundreds of thousands of librarys in America. There are cheap computers (but then you have one or wouldn't be reading this), there is cheap acess to the internet. Everything is out there for those who want to learn. Nothing is restricted. Opportunities to succeeed have never been... [ More ]

Reply #32

Sandra Dee — Wed, 21 May 2008 20:50:54 GMT

hmmm, MeFirstYouLast, yeah yeah but I didn't quite get how you feel! .. you have a way with words you know .. no crooked lawyer will pull a fast one on you, ha but I have to agree with you 100% - in all my 33yrs of living, I've had one, count 'em, ONE balsy roommate ask for $50 .. the look I gave her, let's just say before the end of the day my money was back in my hands .. people treat you the way you allow them - I dare someone to come up to me with chapped palms .. it's really not rocket scie... [ More ]

Reply #31

MeFirstYouLast — Wed, 21 May 2008 20:33:09 GMT

No one ever went broke unwillingly, they gladly gave their money away. Whether it made them feel good, wanted to appease the rightious, felt guilty, or were just plain stupid - they gave it way willingly. That is the problem, nothing else.

Insufficient backbone. Zero confidence of identify. Imaturity. No wonder they have to have a zillion lawyers and advisers and take months to get from one point to another. Grow up, be a secure person, and learn how to ignore people who never contributed to... [ More ]

Reply #30

pigsNtrees — Wed, 21 May 2008 16:20:40 GMT

How do you know these folks have no problems being so high profile? I remember several years ago when Paul Allen (co-founder of Microsoft) had his identify stolen.

You hardly every hear of the ones who win large jackpots going broke and worse who do not flaunt the fact that they win. They keep it private. The ones that get the headlines for the most part, are those that love all the attention a big win brings. However along with that attention comes those who want to part you from your money.... [ More ]

Reply #29

spy153 — Wed, 21 May 2008 03:14:20 GMT

sometimes I feel this way too, but it's good to know what to do should I change my mind. And come on, the making a statement idea is cool. IMHO

Reply #28

MeFirstYouLast — Wed, 21 May 2008 03:10:48 GMT

The world is full of millionares, no problems. Forbes provides a list of the richest in the world. There are hundreds of new millionares every year. None of them have found a need to hide in caves. If I was afraid of the consequences of winning a jackpot, then I would not see a reason to try to win a jackpot. Why try to make a nightmare of my life? Hit it big and enjoy what the world has to offer. No other reason to have tons of money

Reply #27

spy153 — Wed, 21 May 2008 02:48:45 GMT

Now that's an idea! Maybe make statement about how I feel about the current gas prices., or how the kids are dressing in emo garb... with a funny spin on it. I don't think that has ever been done in lottery history.

Yeah, I think they would if they could get away with it.

Reply #26

pigsNtrees — Wed, 21 May 2008 02:32:54 GMT

Wow that was a depressing read. I think if Texas had the same rules, I would go to the press conference wearing a Richard Nixon mask, with a t-shirt with something naughty written on it. I get the feeling if your Social Security number wasn't protected by law they would release that as well.

Reply #25

spy153 — Wed, 21 May 2008 02:19:35 GMT

Thanks, pigsNtrees, but I don't think that is really an option for me right now.

The rules read:

Can I remain anonymous when I claim my lottery winnings?

No. Winners often ask if they can claim Lottery prizes anonymously. Virginia state law stipulates that a person must claim a prize; winners cannot claim a Virginia Lottery prize with a limited liability company or a trust, for example. In addition, the claimant s name, hometown and prize are public record and are released t... [ More ]

Reply #24

psykomo — Tue, 20 May 2008 19:54:24 GMT

BUY ur book's on LP and don't TRUST lawyer's many kicked PSYKO

iN the business world BUT, U have to still DICTATE!!

and pay lawy'er fee'ssss the A$$HOLE's expect- IT !!

BUT, yes READ if U can (spell-edutation)

LP ..................SEND-US-the-BILL

Reply #23

psykomo — Tue, 20 May 2008 19:37:52 GMT

JWBLUE:

UR so STUPID so BRASH to propose

HAVE any of YOU ??????????????????????????????????????

STUPID'sssssssssssssssssss$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

walked in a LAWYER's

and got OUTTA JAIL @@@ no COST???

LAWYER's cost $$$$$$$$$$$$$$

( u must know how to SCREW themo!0 ^^^^before they SCREW-U

Reply #22

pigsNtrees — Mon, 19 May 2008 18:21:13 GMT

This hinges on what the rules are if any, on your place of residents. If they post the info of where you lived at time of purchase, this will not work. You need to have this well layered before you claim your ticket.

What I would do before I claim my ticket is move to a large city whilst remaining in the city I bought the ticket in. Bank account, phones, mailing address changed the works. That way my friends, relations and the media would see that the winning ticket was bought at store in my

Reply #21

spy153 — Mon, 19 May 2008 17:16:41 GMT

I know this may be off topic, but I'm asking anyway while all of you are on this train of thought.

In Va, you can't claim a jackpot win as a trust or anonymously. What would you do

Reply #20

Uff Da! — Mon, 19 May 2008 17:09:41 GMT

It would then be wise to have a dated contract to that effect, signed by all participants, just as with an office or other pool. The IRS will not likely accept the notion that just because relatives say so, it is so. I don't pretend to be an attorney, but would think that if you had a non-relative witness the signing of such a contract among a group of relatives, that would give some additional weight. But when the IRS smells money, they can be really picky and people spend a lot of money fighti... [ More ]

Reply #19

Uff Da! — Mon, 19 May 2008 16:53:42 GMT

I followed KY's advice last year and typed up an affidavit gifting shares in any MM ticket I might purchase before July 1, 2008 to a large number of relatives, whom I designated by name and % interest. Many would receive only a 1 or 2% share. I took this to my bank to have notorized, which they did without charge. At the time I wasn't buying MM lottery tickets until the jackpot cash option was about 50 million, but I've since started occasionally buying them at lower amounts. Therefore when I dr... [ More ]

Reply #18

pigsNtrees — Mon, 19 May 2008 16:06:27 GMT

I've been looking around on the Texas site (my state) and here is what it says in the FAQ section.

~~~~~~~~~~~~~~~~~~~~~~~~~

If I join with a group of players, can more than one person claim a prize on the same ticket?

No. The Texas Lottery Commission will pay only one claimant per ticket. A claimant can be an individual, a trust, a partnership, a corporation, or any other legal entity.

~~~~~~~~~~~~~~~~~~~~~~~~~~

What this does not say is if the legal entity is subjected to m... [ More ]

Reply #17

pigsNtrees — Mon, 19 May 2008 15:53:12 GMT

What if your family members pull their moneys to buy tickets? You would determine how much they get by how much they contribute. This would not then be a gift, ergo no gift taxes.

Reply #16

KY Floyd — Mon, 19 May 2008 04:22:34 GMT

An email isn't worth the paper it's printed on. Swearing an affidavit is easy and establishes an intent as of the time the afidavit is sworn. What that intent is will matter, so you need to make sure you're very clear about giving shares of the ticket as soon as it has been purchased. I think the IRS can be trusted to argue that varying the shares based on the jackpot amount demonstrates that your intent is to share any jackpot you might win rather than the ticket, which requires sharing any pri... [ More ]

Reply #15

river1 — Sun, 18 May 2008 05:04:52 GMT

i have sent myself an email that i have titled lotto splits .

in this email i have detailed how i will split my tickets

pot size

me

siblings

charity trust

pops grandkids

powerball

megamillions

15-45

60%

40%

46-100

50%

25%

25%

100+

40%

25%

25%

10%

lotto

1-10.9

100%

11+

60%

40%

hope that works

the email is a dated doc... [ More ]

Reply #14

KY Floyd — Sun, 18 May 2008 04:14:42 GMT

For starters, a trust can protect your assets from lawsuits and estate taxes, as well as avoiding probate.

Reply #13

KY Floyd — Sun, 18 May 2008 04:11:13 GMT

If there is a pre-dated document itemizing who gets what (percentage or actuals)

How can you give somebody an actual amount of money before you've won the money? The only way to avoid making a sizable gift of a lottery prize is to make a gift of a share in the ticket before it becomes a winning ticket.

Reply #12

KY Floyd — Sun, 18 May 2008 04:08:38 GMT

If your ticket wins and you give shares to anyone, you've made gifts of a significant amount of money and can expect to owe a gift tax. If, OTOH, you give shares of a ticket that hasn't won, the gift has minimal value, and won't result in owing gift taxes. If you present a winning ticket and claim that you own most of it and your parents or siblings own small shares you'd better be able to prove that the gift was made before the ticket became a winning ticket. Without that proof the IRS will ass... [ More ]

Reply #11

MeFirstYouLast — Sat, 17 May 2008 21:39:45 GMT

Why are people obessessed with merging the state lottery director into both the state tax collector and the United States Internal Revenue Service? The lottery ticket is not a tax form and was never intended to be. The state Lottery Director is not part of any tax collection agency, and was never intended to be. Federal taxes are required on all gambling winnings. When you report those winnings, and those winnings are part of a lottery, you will not be required to submit the lottery ticket. Ther... [ More ]

Reply #10

savagegoose — Sat, 17 May 2008 17:29:54 GMT

im sure the gov does care. say u decided to go percentages, say u decided that a load of children in your state needed a college fund. say you divided your wining up, into umm i dunno the max earnings before you had to pay pax. sau u won 1 mil land max u can earn b4 tax is payed is $10k. thgen ythat would be 100 kids. so in your super generous act, u claim the jackpot in the name of 100 needy children. this ensuring they all claim the tax free threshold.

but the feds getting zilch in way... [ More ]

Reply #9

tntea — Sat, 17 May 2008 14:37:50 GMT

good for lottery pools

Reply #8

MeFirstYouLast — Sat, 17 May 2008 01:20:42 GMT

It matter not one iota what the lotteries will or won't allow. They have zero influence on taxes. Z-E-R-O! The lottery only passes out the money, they don't tax it. You do the paperwork up front and uncle doesn't care either. Just so it is legal (in the eyes of the government) and they get every thing that is owed them. Every thing is the key phrase. If there is a pre-dated document itemizing who gets what (percentage or actuals) the tax man will be happy to tell you what he wants from you.... [ More ]

Reply #7

Stack47 — Fri, 16 May 2008 23:47:20 GMT

There was a large jackpot winner from Michigan that said he would give some of his co-workers each a $1 million. The current cash value of Mega Millions is $119 million and it would be easy if we could designate a $1 million each be deducted and given to Joe, Bob, and Pete and/or 5% to your parents and brother. The best would be if we could hand the lottery a list of deductions, each paying their own tax, and be done with it, but lotteries won't let us do that.

One size does not fit all with... [ More ]

Reply #6

Destined — Fri, 16 May 2008 04:05:59 GMT

I've also pondered this question and have always wondered if you could claim the ticket in form of a percentage pool to avoid being double taxed. For example if my ticket won, it would be a lot better if I could claim 90%, my parents claim 5%, and my brother claim 5%. This would be my way of giving money away without being subjected to gift taxes.

I don't even know if this is allowed because I've never heard of it being done this way. But I guess if you would do this, you might as well set u... [ More ]

Reply #5

JWBlue — Fri, 16 May 2008 02:30:38 GMT

Can creating a trust circumvent the gift tax laws when giving away money? I know this is all daydreaming stuff, but why not throw this stuff around. There is a lot less important daydreaming crap on this board.

Reply #4

DC81 — Fri, 16 May 2008 02:10:55 GMT

It probably won't fully protect you all that much though if you get a big judgement against you, but Nevada does allow to do form a LLC without an actual business behind it. It might be too complicated for what it's worth so maybe going the Trust route would be better. But eh, this is something you should work out with a lawyer when you're getting everything ready. There's certainly many factors that aren't even touched upon with all our daydreaming . Just don't let on that you have a lot of mon... [ More ]

Reply #3

DC81 — Fri, 16 May 2008 01:33:25 GMT

Forming a LLC for your assets can be done as a form of protection of assets, specifically from lawsuits, especially frivolous ones, something a trust won't really do, an LLC gives you a bit of protection I think. It's a rather popular thing to do, especially using Nevada as a base where the laws more friendly to asset protection compared to most other states.

Reply #2

JWBlue — Fri, 16 May 2008 01:15:43 GMT

Claiming as a trust, OTOH, can have definite advantages

Besides annonymity, what are the other advantages

Reply #1

KY Floyd — Fri, 16 May 2008 01:06:50 GMT

I'm assuming that most people who think they should claim as an LLC are confused about what that means. There's a lot to be said for forming a corporation to deal with your assets after winning, but I don't see any advantage to claiming it as a corporation. Claiming as a trust, OTOH, can have definite advantages, especially if the state only releases the name of the trust, or the trust's lawyer. Some of the basic info about the trust will be a public record, but not the details of who is a benef... [ More ]

Why is it beneficial to collect a lottery jackpot as a LLC?

JWBlue — Fri, 16 May 2008 00:18:02 GMT

I have seen this posted by many people in different threads, but without any type of explanation why this is the case. What are the benefits of doing this or is everyone just talking out of their ass