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

Topic closed. 38 replies. Last post 8 years ago by cc63.

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az
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March 21, 2007
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Posted: May 18, 2008, 1:04 am - IP Logged

"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.

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 document that i think will hold up as giving a share of the ticket before winning it. non-jackpot winnings will be used to buy future tickets.  i also will set up all this as a trust before claiming any jackpots. wether this is IRS legal i don't know as i am not a lawyer or tax attorney.

 

later jim

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    NY
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    Posted: May 19, 2008, 12:22 am - IP Logged

    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 prize. I'd keep it simple and just pick a threshold at which the tickets are shared. A jackpot advertised at 25 million will only net about 8 million, whoch  means an annual pre-tax income of about 400k in a safe and conservative investment. With an income that low you're not likely to have  many worries about gift taxes, anyway.

      pigsNtrees's avatar - pigsNtrees
      Mallorn trees of Lothlorien
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      Posted: May 19, 2008, 11:53 am - IP Logged

      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.

      Quando Porca Volare!

      drunk hobbit

        pigsNtrees's avatar - pigsNtrees
        Mallorn trees of Lothlorien
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        Posted: May 19, 2008, 12:06 pm - IP Logged

        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 more taxes.

        Quando Porca Volare!

        drunk hobbit

          Uff Da!'s avatar - InCelebration 001.jpg
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          Posted: May 19, 2008, 12:53 pm - IP Logged

          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 draw up a new document in July, I will likely add the provision KY suggested that the gift of shares in the tickets is only effective when the advertised jackpot is over a set amount.

          I'm glad I included in the affidavit a date beyond which the document is no longer effective.  This allows me to change my mind.  I've already decided that I'll make at least one additon to the list of relatives who will get a share, and plan to increase the percent a few others get from 1% to 2%.  I may even add my BF for a 1 or 2% share, though if I do so I'll make the document effective for only six months instead of a whole year to give me a chance to update the document sooner in the event we part ways. 

          I'm keeping records of how much each individual has earned from their shares, but since no ticket won more than $3, no one's earnings other than mine exceed sixty cents yet!  So I haven't distributed it.  LOL!  When it reaches one dollar, I guess I'll contact them to see at what point I should start distributing the money.  It seems rather silly when the relatives live all across the country, only a few know I'd signed such a document and I haven't even seen several of the relatives in more than 20 years.  But I expect that in the unlikely event we should later win big, having documentation of small wins treated as shares would minimize chances of the IRS questioning the arrangement on the big one.

            Uff Da!'s avatar - InCelebration 001.jpg
            Washington State
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            Posted: May 19, 2008, 1:09 pm - IP Logged

            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.

            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 fighting them even if they eventually win.  I'd think that even with a non-relative witness, it would be safer to have the contract between relatives notorized.

              spy153's avatar - maren

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              Posted: May 19, 2008, 1:16 pm - IP Logged

              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?

              voir-vous dans mes reves!Cool

                pigsNtrees's avatar - pigsNtrees
                Mallorn trees of Lothlorien
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                Posted: May 19, 2008, 2:21 pm - IP Logged

                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?

                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 hometown but the winner was from some place else. They may think that it's just someone with the same name that was the winner and not you. Hang out there until you get your ducks in a row then tell everyone that you are moving.

                Well that's the best I can come up with.

                Quando Porca Volare!

                drunk hobbit

                  psykomo's avatar - animal shark.jpg

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                  Posted: May 20, 2008, 3:37 pm - IP Logged

                  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?

                  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

                    psykomo's avatar - animal shark.jpg

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                    Posted: May 20, 2008, 3:54 pm - IP Logged

                    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

                    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$$$$$$$$$$$$$$

                      spy153's avatar - maren

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                      Posted: May 20, 2008, 10:19 pm - IP Logged

                      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 hometown but the winner was from some place else. They may think that it's just someone with the same name that was the winner and not you. Hang out there until you get your ducks in a row then tell everyone that you are moving.

                      Well that's the best I can come up with.

                      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 to the media (usually for prizes $100,000 and up). Winners also agree to allow the Lottery use of their photo for reasonable publicity. News releases, often with photographs, are displayed on the Lottery`s Web site. For some jackpots and for some Scratcher prizes, game rules require the winner or winners to appear at a news conference held by the Lottery.

                      Virginia Lottery prizes are provided by the public (people who play the games); it is important to disclose where prizes go. All expenditures made by the Virginia Lottery must be made public. A winner`s private information (telephone number, street address, Social Security number, etc.) is protected by law and will not be released.

                       

                      So, no wiggle room there as far as I can see....

                      voir-vous dans mes reves!Cool

                        pigsNtrees's avatar - pigsNtrees
                        Mallorn trees of Lothlorien
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                        Posted: May 20, 2008, 10:32 pm - IP Logged

                        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 to the media (usually for prizes $100,000 and up). Winners also agree to allow the Lottery use of their photo for reasonable publicity. News releases, often with photographs, are displayed on the Lottery`s Web site. For some jackpots and for some Scratcher prizes, game rules require the winner or winners to appear at a news conference held by the Lottery.

                        Virginia Lottery prizes are provided by the public (people who play the games); it is important to disclose where prizes go. All expenditures made by the Virginia Lottery must be made public. A winner`s private information (telephone number, street address, Social Security number, etc.) is protected by law and will not be released.

                         

                        So, no wiggle room there as far as I can see....

                        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.

                        Quando Porca Volare!

                        drunk hobbit

                          spy153's avatar - maren

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                          Posted: May 20, 2008, 10:48 pm - IP Logged

                          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.

                          Now that's an idea! Green laughMaybe 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. 

                          voir-vous dans mes reves!Cool


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                            Posted: May 20, 2008, 11:10 pm - IP Logged

                            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!

                              spy153's avatar - maren

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                              Posted: May 20, 2008, 11:14 pm - IP Logged

                              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!

                              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.  Cool IMHO

                              voir-vous dans mes reves!Cool