Welcome Guest
Log In | Register )
You last visited January 17, 2017, 5:54 am
All times shown are
Eastern Time (GMT-5:00)

Big fat tax concern...

Topic closed. 3 replies. Last post 8 years ago by BaristaExpress.

Page 1 of 1
PrintE-mailLink
Blotto's avatar - pengi
New Member
New Jersey
United States
Member #2411
September 30, 2003
16 Posts
Offline
Posted: December 9, 2008, 3:15 pm - IP Logged

Jackpot question:

I agree 100% that the Trust and/or Corporation opinion is definatly the route to take when claiming a jackpot. Both for privacy (upmost importance) and proper management!

 

Now here is my concern (its simple really) and perhaps some of the good folks here have already concidered this and can enlighten me. Now when you claim the prize the trust or corp is going to pay the federal taxes on the money right? Now after that when YOU personally want to access funds, are YOU now taxed a SECOND time on the money once it becomes personal taxable income to you??

 

Dont be quick to just say no...

I means this is pretty simple but I was wondering if folks thought of this? Noone is going to be happy paying taxes twice on the same money so whats the answer?

 

Thanks for having a great forum like this!

    Avatar
    Republic of Texas
    United States
    Member #57557
    January 9, 2008
    1095 Posts
    Offline
    Posted: December 9, 2008, 9:34 pm - IP Logged

    I already have a revocable trust that holds my larger assets, namely my home and investments (not that those are extensive - even before the crash). The trust has my social security number and I am the trustee. I pay all taxes as an individual, so the trust does not have any income tax benefits.  The only thing this trust does is allow my estate to pass outside of the probate process upon my death - which has quite a few benefits including preventing the nature and extend of my assets from becoming public record.

    As to a family trust, I have no clue how those work.

    An LLC or Limited Liability Company is a cross between a partnership and a corporation and is taxed similar to a partnership - on individual tax returns.

    How all this works when claiming a jackpot - I don't know, that is for the experts to explain. I know just enough to ask questions. 

    face

    singlewinnersinglewinnersinglewinner   

      Avatar
      NY
      United States
      Member #23835
      October 16, 2005
      3502 Posts
      Offline
      Posted: December 10, 2008, 4:43 pm - IP Logged

      Corporations only pay taxes on profits (I don't know why nobody told Joe the plumber). If the expenses equal or exceed the income, there are no profits, and therefore there are no taxes.  If the prize is claimed by a corporation and that money is paid out as a legitimate expense, it wouldn't be part of any profit. As Piaceri says, with some corporations the profit simply passes through the corporation to individuals, where it is treated as normal income.

      Technically, if the prize is claimed by a corporation that didn't even exist until after the drawing, the now-valuable ticket was transferred by its original owner to the new corporation. I see two possibilities there. One is that the ticket was sold. That would result in a taxable income to the person who sold the ticket, since they clearly profited. The sale price would determine if the corporation made a profit on the ticket. The other possibility is that the now-valuable ticket was given as a gift. That would mean the original winner owed gift taxes on any value beyond the exclusion. The corporation would have no expense in acquiring the ticket, so their profit would be the full value of the ticket. That doesn't mean it would all be taxable profit at the end of the year, since they could still have expenses beyond any other income.  So far, it would seem that the IRS has concluded that claiming as acorporation doesn't really change the amount of tax collected, andtherefore views it as an acceptable method of claiming a prize for yourself. Claiming through a trust is similar. The taxes are still paid as a personal income tax on the original amount, by the person(s) who would have gotten the money if the trust didn't exist.

        BaristaExpress's avatar - BaristaExpressMX zpsfb0d8b5d.png
        Magnolia, Delaware
        United States
        Member #18795
        July 20, 2005
        789 Posts
        Offline
        Posted: December 10, 2008, 5:36 pm - IP Logged

        Jackpot question:

        I agree 100% that the Trust and/or Corporation opinion is definatly the route to take when claiming a jackpot. Both for privacy (upmost importance) and proper management!

         

        Now here is my concern (its simple really) and perhaps some of the good folks here have already concidered this and can enlighten me. Now when you claim the prize the trust or corp is going to pay the federal taxes on the money right? Now after that when YOU personally want to access funds, are YOU now taxed a SECOND time on the money once it becomes personal taxable income to you??

         

        Dont be quick to just say no...

        I means this is pretty simple but I was wondering if folks thought of this? Noone is going to be happy paying taxes twice on the same money so whats the answer?

         

        Thanks for having a great forum like this!

        There are a few ways to do what needs to be done.

        1) You could form a corporation to claim the jackpot. But if you do that you better use the seasoned corporation. To explain what that is it's a corporation that's a shelf company that's been around for 2 or 3 years in the respected state of incorporation and just do a 24hr. Expedited name change for that shelf company you just purchased! Just go here and do some serious reading on the facts of incorporating.

        Go to www. nevada123. com

        2) The other route to use is to have a Dynasty Trust claim the jackpot.

        Most estate plans address only the client’s immediate wishes involving their children and grandchildren. Through the use of documents such as the Dynasty Trust, The Avelino Law Firm addresses multi-generational goals, i.e. Legacy Wealth.

        Many times family wealth is stripped away by estate taxes and divorce.  A Dynasty Trust allows money to stay within a family for generations while being estate tax and creditor protected. 

        The benefit is that you do not own whatever property is in the Dynasty Trust.  Therefore, it is not included in your estate (to the extent possible) and is creditor protected.  The Avelino Law Firm follows the great words of John D. Rockefeller, “Control Everything, Own Nothing.”.

        Good luck in your quest for the answers that you are looking for. I hope I have been of some help to you.

        Keep dreaming the impossible dream, it just may come true! Thumbs Up