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Claiming as a legal entity

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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.

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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.

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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.

Coin Toss's avatar - shape barbed.jpg

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.

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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.

IPlayWeekly's avatar - avatarmoney
In response to mypiemaster

I agree to much hassle

zinniagirl's avatar - flower avatar_0026.jpg

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
In response to zinniagirl

I Agree!would be nice to have happen Lurking444444444444all

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In response to zinniagirl

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.

mikeintexas's avatar - h87TsB4
In response to IPlayWeekly

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?"

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