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scratch ticket question

 
 
Sir Archibald Stanton 3rd
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      09-24-2003, 06:04 PM


My best friend just won $10,000 on a scratch ticket.
<massachusetts> He asked me if I would cash it for him and receive a
small fee plus having the benefit of paying in $3000 in taxes. Ahem, I
told him of course I wouldn't that may be illegal so of course I said
no but now he's peaked my interest. Hypothetically, would this be a
positive step for me to take? Are the laws regarding scratch tickets
pretty much the same state to state? Of the 10 grand, 27% is taken
right off the top for the feds and another 5% for the state. I've also
heard that with gambling losses and gains can cancel each other out.
Thus, if one wins $10000 but then has $10000 in losing tickets it
evens out. Does this kind of deduction invite an audit? Just curious.
Any advice would be appreciated.

arch
 
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Criswell The Psychic Weatherman
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      09-24-2003, 09:24 PM
Criswell The Psychic Weatherman wrote:

> Sir Archibald Stanton 3rd wrote:
>
> > My best friend just won $10,000 on a scratch ticket.
> > <massachusetts> He asked me if I would cash it for him and receive a
> > small fee plus having the benefit of paying in $3000 in taxes. Ahem, I
> > told him of course I wouldn't that may be illegal so of course I said
> > no but now he's peaked my interest. Hypothetically, would this be a
> > positive step for me to take? Are the laws regarding scratch tickets
> > pretty much the same state to state? Of the 10 grand, 27% is taken
> > right off the top for the feds and another 5% for the state. I've also
> > heard that with gambling losses and gains can cancel each other out.
> > Thus, if one wins $10000 but then has $10000 in losing tickets it
> > evens out. Does this kind of deduction invite an audit? Just curious.
> > Any advice would be appreciated.
> >
> > arch

>
> The question that could be asked at an audit is, "Do you have those
> $10,000 in losing tickets?" and if you say yes, you will be asked to show
> them. If you say no, or refuse to show them, the auditor will almost
> certainly deny the deduction.
>
> The $3000 is withholding, not taxes. You add the $10,000 in income, and
> the deduction subtracted on Schedule A, subject to the limitations and
> restrictions of the deduction, you will calculate the total tax, and
> subtract any withholdings already withheld from wages, from this ticket,
> etc. In this case, even though the 1099 would be in your name, you are
> not getting income from the ticket, but you are receiving the fee he is
> paying you and he is getting the income from the ticket, even though he's
> trying to get around it.


These are issues a good auditor will be familiar with. If you lie about
giving the money to your friend, you'd better have those $10,000 in losing
lottery tickets. If you tell the truth, you've just set your friend up for
an audit.
--
"A belief is not merely an idea the mind possesses;
it is an idea that possesses the mind." Robert Bolton
Criswell The Psychic Weatherman
E-mail is munged. Clip coupons to respond.


 
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Sir Archibald Stanton 3rd
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      09-24-2003, 10:55 PM
On Wed, 24 Sep 2003 21:24:55 GMT, Criswell The Psychic Weatherman
<(E-Mail Removed)> wrote:

>Criswell The Psychic Weatherman wrote:
>
>> Sir Archibald Stanton 3rd wrote:
>>
>> > My best friend just won $10,000 on a scratch ticket.
>> > <massachusetts> He asked me if I would cash it for him and receive a
>> > small fee plus having the benefit of paying in $3000 in taxes. Ahem, I
>> > told him of course I wouldn't that may be illegal so of course I said
>> > no but now he's peaked my interest. Hypothetically, would this be a
>> > positive step for me to take? Are the laws regarding scratch tickets
>> > pretty much the same state to state? Of the 10 grand, 27% is taken
>> > right off the top for the feds and another 5% for the state. I've also
>> > heard that with gambling losses and gains can cancel each other out.
>> > Thus, if one wins $10000 but then has $10000 in losing tickets it
>> > evens out. Does this kind of deduction invite an audit? Just curious.
>> > Any advice would be appreciated.
>> >
>> > arch

>>
>> The question that could be asked at an audit is, "Do you have those
>> $10,000 in losing tickets?" and if you say yes, you will be asked to show
>> them. If you say no, or refuse to show them, the auditor will almost
>> certainly deny the deduction.


They'll be there.
>>
>> The $3000 is withholding, not taxes.


Ahhh Ok. So basically it's the same as earning a $10000
paycheck <gross> and then after deductions of $3200 receiving the net
earnings. <$6800>

>> You add the $10,000 in income, and
>> the deduction subtracted on Schedule A, subject to the limitations and
>> restrictions of the deduction, you will calculate the total tax, and
>> subtract any withholdings already withheld from wages, from this ticket,
>> etc. In this case, even though the 1099 would be in your name, you are
>> not getting income from the ticket, but you are receiving the fee he is
>> paying you and he is getting the income from the ticket, even though he's
>> trying to get around it.

>
>These are issues a good auditor will be familiar with. If you lie about
>giving the money to your friend, you'd better have those $10,000 in losing
>lottery tickets. If you tell the truth, you've just set your friend up for
>an audit.


This is not happening. Im just wondering <read: hypothetical>
how it works. Im also wondering if say John Doe makes $27000 a year.
Could winning this ticket result in a new tax bracket b/c he now make
$37000 for that year? I have a friend who goes the track a lot and he
says there are guys who love to cash these kinds of tickets and do it
for free <they cash nonwitholding winning tickets themselves for a
fee usually 10%> because it gives them legitimate earned income along
with with-holdings. I would never trust a stranger with that much
$$$. Thanks for taking the time to attempt to clear up some things
here. These things can be very confusing.

arch

 
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Criswell The Psychic Weatherman
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      09-26-2003, 02:51 AM
Sir Archibald Stanton 3rd wrote:

> On Wed, 24 Sep 2003 21:24:55 GMT, Criswell The Psychic Weatherman
> <(E-Mail Removed)> wrote:
>
> >Criswell The Psychic Weatherman wrote:
> >
> >> Sir Archibald Stanton 3rd wrote:
> >>
> >> > My best friend just won $10,000 on a scratch ticket.
> >> > <massachusetts> He asked me if I would cash it for him and receive a
> >> > small fee plus having the benefit of paying in $3000 in taxes. Ahem, I
> >> > told him of course I wouldn't that may be illegal so of course I said
> >> > no but now he's peaked my interest. Hypothetically, would this be a
> >> > positive step for me to take? Are the laws regarding scratch tickets
> >> > pretty much the same state to state? Of the 10 grand, 27% is taken
> >> > right off the top for the feds and another 5% for the state. I've also
> >> > heard that with gambling losses and gains can cancel each other out.
> >> > Thus, if one wins $10000 but then has $10000 in losing tickets it
> >> > evens out. Does this kind of deduction invite an audit? Just curious.
> >> > Any advice would be appreciated.
> >> >
> >> > arch
> >>
> >> The question that could be asked at an audit is, "Do you have those
> >> $10,000 in losing tickets?" and if you say yes, you will be asked to show
> >> them. If you say no, or refuse to show them, the auditor will almost
> >> certainly deny the deduction.

>
> They'll be there.
> >>
> >> The $3000 is withholding, not taxes.

>
> Ahhh Ok. So basically it's the same as earning a $10000
> paycheck <gross> and then after deductions of $3200 receiving the net
> earnings. <$6800>
>
> >> You add the $10,000 in income, and
> >> the deduction subtracted on Schedule A, subject to the limitations and
> >> restrictions of the deduction, you will calculate the total tax, and
> >> subtract any withholdings already withheld from wages, from this ticket,
> >> etc. In this case, even though the 1099 would be in your name, you are
> >> not getting income from the ticket, but you are receiving the fee he is
> >> paying you and he is getting the income from the ticket, even though he's
> >> trying to get around it.

> >
> >These are issues a good auditor will be familiar with. If you lie about
> >giving the money to your friend, you'd better have those $10,000 in losing
> >lottery tickets. If you tell the truth, you've just set your friend up for
> >an audit.

>
> This is not happening. Im just wondering <read: hypothetical>
> how it works. Im also wondering if say John Doe makes $27000 a year.
> Could winning this ticket result in a new tax bracket b/c he now make
> $37000 for that year? I have a friend who goes the track a lot and he
> says there are guys who love to cash these kinds of tickets and do it
> for free <they cash nonwitholding winning tickets themselves for a
> fee usually 10%> because it gives them legitimate earned income along
> with with-holdings. I would never trust a stranger with that much
> $$$. Thanks for taking the time to attempt to clear up some things
> here. These things can be very confusing.
>
> arch


Just because it's a regular practise doesn't necessarily make it legal. I
understood that your post was a hypothetical, and that you didn't go through
with the transaction. I was answering also for anyone considering the same
thing.
--
"A belief is not merely an idea the mind possesses;
it is an idea that possesses the mind." Robert Bolton
Criswell The Psychic Weatherman
E-mail is munged. Clip coupons to respond.


 
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