USA Lottery winnings

[Robert Jacobus]

I have a group of 7 individuals who won the Fl lottery in Dec. 2010, they went to claim the prize and were told another person had filed a claim for part of the winnings and the Lottery held up the pay out until further court action was taken. The court allowed the Lottery to dispurse the funds in 2012 to a escrow account for the winners and the person who claimed to own a share. The court allowed the original 7 to receive 1/8 of the funds in 2011 since their right to some of the monies was not in doubt. They received a 1099g for the 1/8 share they received in 2011. The case was resolved in 2012 and the 7 prevailed and were paid 1/7 of the remaining 1/8 in the escrow account as well as the interest that was in the account. The law firm that over saw the account reissued form 1099g to the 7 winners with the entire ammount of the winnings for the tax year 2011 and told the winners to ammend their 2011 tax forms. Is this correct? They did not receive the additional funds until 2012 should not be liable for tax on monies not received in 2011. There is also the issue of $37k in legal fees each of the 7 incured while trying to defend their case. Any comments?

 

[kirby]

Question of whether it is correct to have to amend: if the 1099 is reissued with the higher amount for the old tax year then yes you have to amend to match that.

As you asked for comments: My comment is I would like to have the "problem" of paying tax on a million in lotto winnings.

 

[Robert Jacobus]

Question of whether it is correct to have to amend: if the 1099 is reissued with the higher amount for the old tax year then yes you have to amend to match that.

As you asked for comments: My comment is I would like to have the "problem" of paying tax on a million in lotto winnings.

Why would not the 7 be issued a new 1099 for the additional monies won in court in 2012 for the 2012 tax year? They received the money in 2012 not 2011.........

 

[kirby]

I agree with your viewpoint. But the person who matters is the one sending you the 1099.