Maybe in MI they only report the clubs name, but I posed a similar question to the FL lottery commission...
If I won the FL lottery, and wished to include family via filing a 5754, is the 5754 part of the public record (thus available to anyone who asks for it)?
I got what I think was a form letter response...
Thank you for writing the Florida Lottery. Occasionally we do have requests such as the one you are inquiring about, and gladly I will answer. Anyone who may win an outstanding amount with the Florida Lottery, the winner(s) cannot remain anonymous. Florida law mandates that the Florida Lottery provide a winner's name, city of residence, game, date and amount won to any third party who requests the information. However Florida Lottery winners home addresses and telephone numbers are confidential.
Some clarification, because their response is confusing or contradictory..
First, according to FL lottery regulations, there can only be "one" winner per ticket, and only one check or disbursement from the FL Lottery. That is to the person who signs the back of the ticket. If a winner fills out form 5754, it is the winner that issues a check to each of the persons receiving the winnings. The FL Lottery is only responsible for withholding the taxes for each of the individuals named in 5754.
But if you look at the response, it says "winners" (plural) cannot remain anonymous. So that leads me to believe that form 5754 is part of public record, thus exposing all persons sharing in the winnings.
If you did form a "club" in MI, what entity would you use? LLP, LP, LLC, S corp?
If an LLP or LLC or LP, my guess is that you could pay as much as 15% more in taxes, since all earnings are subject to self-employment taxes. But I'm guessing at this point, since I don't know how the IRS would classify a winning lottery ticket in such an entity. Was it an investment? Capital gain? Regular income? Some of these carry different different tax consequences to the K1 of a LLC, LLP, LP, etc.
You can be "semi" anonymous with an "S" corp, I think. The "winner" would start the S corp, with that persons name exposed to the public via the state filiing, claim the ticket, then add the "shareholders" or other winners as additional shareholders of the S corp. I don't know of any state requirement that requires the corporation to report the names of shareholders added after incorporation. All "earnings" of the S corp are reported on each shareholders personal 1040 via the K1, and are not subject to self employment taxes. Yes, the owner of the S corp has to draw a salary, but for what the corporation is shooting for (winning the lottery, buying tickets), that can be a nominal amount, subject to employment taxes. Again, I don't know if this would work, because of how lottery winnings in a corporation are classified. If it's investment income, and that's the sole source of revenues, it could wind up paying a hefty additional tax for having a large percentage of income from investments.
Any comments?
As for trusts, I really don't understand them. If I did set up a trust to share winnings amoung others, is that money readily available? In other words, can the trust liquidate right after the trust receives the winnings? Or is it dribbled out over time?