Tough Legal Question about Lottery Tax. Serious Posters plz

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EdmundBurke23
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Joined: Sat Dec 26, 2009 4:37 am

Tough Legal Question about Lottery Tax. Serious Posters plz

Postby EdmundBurke23 » Sun Apr 10, 2011 7:51 am

Each person in a group of six, including John, want a super computer, but none of them wants to spend $60,000 for it. So they decide to do the following:

-Each person, including John, picks a different number ranging from 1 through 6. John picks #5.
-The group raises $60,000 by having each of its members pitch in $10,000.
-They roll a dice (Outcome: 5).
-John wins the super computer.

1. Is there a legal way for John to avoid paying lottery taxes?

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hyunseoki
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Re: Tough Legal Question about Lottery Tax. Serious Posters plz

Postby hyunseoki » Sun Apr 10, 2011 9:52 am

no. you'll have to report the fair market value of it to the IRS.

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SOCRATiC
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Re: Tough Legal Question about Lottery Tax. Serious Posters plz

Postby SOCRATiC » Sun Apr 10, 2011 9:59 pm

What you're doing is called a raffle. Each state has their own set of laws governing raffles.

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JusticeHarlan
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Re: Tough Legal Question about Lottery Tax. Serious Posters plz

Postby JusticeHarlan » Mon Apr 11, 2011 7:18 am

1. Incorporate a corporation, co-owed by all participants
2. Have each person invest $10k in said corporation to purchase a supercomputer.
3. Have corporation raffle off the right to buy their first supercomputer for a $1 ; inform no one but the investors.
4. John wins raffle. Buys computer for $1 + tax.
5. Use profits on this sale to buy a beer on credit.
6. Declare bankruptcy, dissolve the corporation, and screw over beer vendor.
7. ????
8. Profit.

Oh, wait, you wanted serious posters. Disregard then.




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