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Claiming as a legal entity

Topic closed. 9 replies. Last post 2 years ago by mikeintexas.

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Baton Rouge, LA
United States
Member #4602
May 7, 2004
699 Posts
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Posted: December 30, 2014, 11:23 pm - IP Logged

The Louisiana Lottery has this on it's site about claiming a winning ticket as a legal entity(trust, LLC, etc.) I thought this was interesting so I thought I'd pass it on.

The prize on a winning lottery ticket may be split among a group of ticket owners; however only one prize check is issued.  The prize check is issued to either one person or legal entity (partnership, trust, etc.).  Each member of the group provides a completed IRS Form W-9 for tax reporting purposes at the time of the claim. The person receiving the check for the group also provides picture identification and is responsible for distributing the winnings to the group members. 

For a prize paid in a single payment, the check recipient may choose to complete a Federal Form 5754 that ensures the tax obligation of the prize is distributed among the group members according to the gross prize amount of each person's share. The Federal Form 5754 allows the Lottery to send a separate W-2G tax form to each individual winner noting the amount won and withheld on their behalf.

The Powerball or Mega Millions jackpot prize may be paid in the annuity payment format or the single payment cash option.  The group members must decide on one payment option; it is not possible for some group members to take the cash option and others to choose the annuity.

While it is not necessary for a group of people to form a legal entity to claim the cash option, the Lottery asks a group of winners to form a legal entity with an assigned tax identification number for a jackpot prize paid in annual installments. This simplifies the tax reporting and prize distribution for a group of people receiving payments over an extended time.

When claiming a prize as a legal entity, the legal document organizing the entity must list the name of each member of the group, their city of residence, and the portion of the prize each person will receive.

The Lottery encourages all players to seek financial advice before claiming a large jackpot prize.

As with all claims, the names of those receiving prize funds and their city of residence is public record.

Prisoner Six

"I am not a number, I am a free man!"

    noise-gate's avatar - images q=tbn:ANd9GcR91HDs4UJhjxO7cmeMQWZ5lB_FOcMLOGicau4V74R45tDgPWrr
    Bay Area - California
    United States
    Member #136477
    December 12, 2012
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    Posted: December 30, 2014, 11:43 pm - IP Logged

    California seems to have done the same thing PrisonerSix.

     

    How Does a Player
    Group Divide the
    Tax Liability?
    Group winners of Scratchers annuity
    prizes, SuperLotto Plus® jackpot, Mega
    Millions® jackpot or Powerball® jackpot
    prizes must choose the same payment
    option, and may use the Multiple
    Player Ownership Claim Form which
    allows each group member (up to
    100 members) to receive individual
    payments from which their federal
    taxes will be withheld.
    Group winners of prizes other than
    Scratchers annuity prizes, SuperLotto
    Plus jackpot, Mega Millions jackpot or
    Powerball jackpot prizes do not qualify
    for individual payments by the Lottery.
    Those winners must select a group
    representative to file a Lottery Claim
    Form and receive and distribute the
    prize to the other group members. In
    order to accurately assess the group
    members’ individual tax liability, the IRS
    provides Form 5754 for this purpose
    and the group representative should
    ensure each member fills
    out this form prior to receiving their
    portion of the prize. IRS Form 5754
    must be filed with the California
    Lottery by December 31 for the tax
    year in which the prize was paid. Using
    the information provided on the IRS
    Form 5754, the California Lottery
    will issue an IRS W2-G Form to each
    individual or group member receiving
    individual payments by January 31
    of the following year.

    People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

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      Baton Rouge, LA
      United States
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      May 7, 2004
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      Posted: January 10, 2015, 12:00 am - IP Logged

      Interesting. The one thing I wonder about and can't seem to find an answer for anywhere is if in Part I of the form 5754, can an entity such as a LLC that has a taxpayer ID number be listed instead of an individual, then those receiving the prize and having to pay the taxes be listed in Part II.

      IRS form 5754

      I run a lottery club with 11 members and if we do hit the big one, we will consult professionals but for now, just curious.

      Prisoner Six

      "I am not a number, I am a free man!"

        Coin Toss's avatar - shape barbed.jpg
        Zeta Reticuli Star System
        United States
        Member #30470
        January 17, 2006
        10351 Posts
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        Posted: January 10, 2015, 12:18 am - IP Logged

        From the OP:

        The group members must decide on one payment option; it is not possible for some group members to take the cash option and others to choose the annuity.

        Any group that doesn't have this decided before hand is looking for trouble.

        Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

        Lep

        There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

          mypiemaster's avatar - 2015021003pileofcash
          JACKPOT HUNTER

          United States
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          April 2, 2013
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          Posted: January 10, 2015, 6:43 am - IP Logged

          Just buy your own tickets if you don't have the stomach for drama. Pools can be a lot of fun, if done right. It also can have a lot pitfalls, if done wrong.

          Seek and ye shall find -Matt. 7:7 ...Ask and ye shall receive -John 16:24 ...Give and it shall be given unto you -Luke 6:38 ...Be careful what you ask for!!! -Mypiemaster 1:1

          Having Money Solves Problems That Not Having Money Creates Yes Nod ****John Carlton****

            IPlayWeekly's avatar - avatarmoney
            Columbus, Ohio
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            Posted: January 12, 2015, 11:37 am - IP Logged

            Just buy your own tickets if you don't have the stomach for drama. Pools can be a lot of fun, if done right. It also can have a lot pitfalls, if done wrong.

            I agree to much hassle

              zinniagirl's avatar - flower avatar_0026.jpg
              nc
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              October 26, 2010
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              Posted: January 12, 2015, 7:19 pm - IP Logged

              good luck to you!  Just make sur you have everyone in the group sign a contract stating how the group will claim the prize ie lump sum vs annuity, who will be the primary name,where the tickets will be purchased, how often an  d by who....etc. Include a provision about personal tickets if someone should purchase a winner.  Make sure everyone has a copy of the tickets.  THen relax, purchase your own personal tickets at another location, at a different time with a receipt, to protect you from the group.

              May your dream come true!  Living on the border of two states, I have two different sets of rules for redeeming my tickets.  I prefer one state over the other due to which office is closest for what will be the longest drive of my life to claim my winning ticket. 1 hou vs 3 hoursl  lots of decisions to make should that wonderful day arrive...

              Good luck to al and may your wishes come true!

                uprrman's avatar - nw bookeep.jpg
                harvard,il
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                September 4, 2010
                2459 Posts
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                Posted: January 12, 2015, 7:26 pm - IP Logged

                good luck to you!  Just make sur you have everyone in the group sign a contract stating how the group will claim the prize ie lump sum vs annuity, who will be the primary name,where the tickets will be purchased, how often an  d by who....etc. Include a provision about personal tickets if someone should purchase a winner.  Make sure everyone has a copy of the tickets.  THen relax, purchase your own personal tickets at another location, at a different time with a receipt, to protect you from the group.

                May your dream come true!  Living on the border of two states, I have two different sets of rules for redeeming my tickets.  I prefer one state over the other due to which office is closest for what will be the longest drive of my life to claim my winning ticket. 1 hou vs 3 hoursl  lots of decisions to make should that wonderful day arrive...

                Good luck to al and may your wishes come true!

                I Agree!would be nice to have happen Lurking444444444444all

                i want to be a millionaire a second time!

                  Avatar
                  Baton Rouge, LA
                  United States
                  Member #4602
                  May 7, 2004
                  699 Posts
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                  Posted: January 12, 2015, 10:53 pm - IP Logged

                  good luck to you!  Just make sur you have everyone in the group sign a contract stating how the group will claim the prize ie lump sum vs annuity, who will be the primary name,where the tickets will be purchased, how often an  d by who....etc. Include a provision about personal tickets if someone should purchase a winner.  Make sure everyone has a copy of the tickets.  THen relax, purchase your own personal tickets at another location, at a different time with a receipt, to protect you from the group.

                  May your dream come true!  Living on the border of two states, I have two different sets of rules for redeeming my tickets.  I prefer one state over the other due to which office is closest for what will be the longest drive of my life to claim my winning ticket. 1 hou vs 3 hoursl  lots of decisions to make should that wonderful day arrive...

                  Good luck to al and may your wishes come true!

                  We don't have a contract, but we've already agreed to the lump sum. I do give a copy of the tickets to each member, so we all know which numbers are ours'. In addition, the tickets I buy for the group are multidraw tickets which cover 4 drawings between paydays. My personal tickets are single draw purchased on different days at different stores, so there's no chance of confusion.

                  We've been playing for many years now and the best we've done is around $100 during one 2 week round, other than that, just lower tier prizes here and there, which are rolled back in for more tickets. Louisiana sometimes does a Millionaire Raffle with a limited number of tickets giving away $1 million. We've bought those a few times too, but they didn't win for us. Even so, we keep trying.

                  As for the issue of claiming, large prizes have to be claimed at lottery headquarters in the state capital, which is where we live. In fact, the headquarters isn't far from work.

                  Thanks for the good words.

                  Prisoner Six

                  "I am not a number, I am a free man!"

                    mikeintexas's avatar - tx avatar-1.gif
                    Texas Panhandle
                    United States
                    Member #136843
                    December 20, 2012
                    1277 Posts
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                    Posted: January 13, 2015, 1:49 pm - IP Logged

                    I agree to much hassle

                    I agree and have always gone solo on my lottery pursuit.

                    I wrote about this not long after I first started participating in this forum, but after my pop retired, he started hanging out at a friend's used car lot along with 4-5 other retired men, playing dominoes and poker in a back room.   They decided they'd create a lottery pool and each chipped in something like fifty bucks.  They drew up an agreement giving each equal shares in any jackpot and they all signed and the car dealer notarized it.  They came up with several sets of numbers they would play ea. draw and when someone bought the tickets, they each signed the back and the dealer used his copy machine to give them ea. a copy and the tickets would go into the dealer's safe.  Their "bank" was enough to allow them to play for a month or longer.  It seemed like a pretty good system, but like most things, it  fell apart when there'd be the usual guy who was tardy with chipping into the pool after the bank was empty.

                    A funny note:  after he told me about the system, I asked him if they had a name for the pool.  He said no, and since most of them met at a local diner for coffee or breakfast before heading to the dealer's for their games, I suggested "The Breakfast Club" and tried my best to not laugh when I said it.  He said that was a great name and they started calling their group by that name.  It wasn't too long after that that the movie aired on TV and my mom and dad watched it.  The next day Pop came by where I worked at the time (right across from the car lot) and told me "Your mother and I were married, but you're really a b*****d, y'know?"


                    A people that elect corrupt politicians, impostors, thieves and traitors are not victims...but accomplices.
                     - George Orwell