|Posted: November 27, 2005, 8:02 pm - IP Logged|A Miami couple created a corporation to claim a $12.4 million Lotto jackpot. Many winners do the same, for tax savings.
And the lucky winner of the $12.4 million July 9 Florida Lotto Jackpot is . . .
Drum roll . . .
Isleo Corp. of Coral Gables.
It may sound unusual, but Isleo Corp. is one of more than 190 corporations, trusts or partnerships to claim Lotto winnings in Florida this year.
There are several good reasons for the suddenly rich to form some kind of company to collect prize money, tax lawyers said.
For one thing, it reduces some taxes on the lottery winnings.
''I don't see any reason to volunteer giving away money to the government,'' said Roland Sanchez-Medina, an attorney representing the winners behind Isleo: Israel Rondon, a 71-year-old retired construction worker from Cuba and his girlfriend, Leonor Merlo.
The Miami couple fused their first names to create the corporation's name.
Rondon and Merlo, whose phones were likely ringing off the hook with calls from charities, solicitors, friends and long-lost family, could not immediately be reached for comment.
''They're humble people. I think they're a little shell-shocked by this,'' Sanchez-Medina said.
The Florida Lotto will only award prize money to a single entity. So winners sharing the prize often form a company to cleanly divide the money.
''It helps for distribution purposes,'' Sanchez-Medina said.
``You can have the money wired and transferred to each member of the corporation by splitting the proceeds in accordance with their interest in the ticket.''
Lotto winners can also reduce stiff federal gift taxes by giving in a company's name -- up to 55 percent of anything over $1 million -- by appointing family members or friends as company shareholders.
Other tax and estate planning becomes easier and less costly, too, Sanchez-Medina said.
The Coral Gables tax attorney, who has represented three other local lotto winners, said forming an S Corporation offers winners who collect together a way to protect their assets individually and save.
Generally, an S corporation is exempt from most federal income tax, with a few exceptions.
Shareholders file tax returns individually.
''A person suing you might be able to take your share of the stock but they can't get all of the assets of the corporation,'' said Scott Berger, a tax partner with the local accounting firm Kaufman Rossin & Co.
If ''Dad'' wins the lotto, then loses his shirt in a lawsuit, at least ''Mom's'' share of the jackpot is protected.
A corporation can provide some degree of anonymity to its members, but not completely. The Florida Lotto must by law disclose the names of all winners. 'I was hoping to keep [my clients'] identities confidential,'' Sanchez-Medina said. ``But I didn't really push it. Here are these people about to get millions and millions of dollars, you don't want to sit there and cause a problem