Taxes on split Pick 6 ticket

[cougara]

Long-time lurker (seriously, we're talking 5+ years ... have really enjoyed reading and learning, so thank you all), first-time poster here.

Three friends and I split a winning Pick 6 ticket in 2013. The bet was made from one of my friend's online accounts (DRF Bets if it matters), and now that it's tax time, we're all wondering how pros that go in on tickets together handle taxes on winnings.

Does that guy with the account just pay the taxes (presumably at his regular income rate?) and then we would reimburse him for that on the side? Do we each pay taxes on our portion of the winnings at our own income rates? How would that be documented? I've Googled around and seen talk of 5754s and 1099-MISC, but like I said, I figured it was time to sign up for the board and get advice from people who really know what they're doing. I would definitely prefer to do it on my own so I could deduct some losses from other sites, but I don't know if/how that's possible.

Any advice/recommendations are appreciated. I apologize for my obtuseness regarding this matter (and if I should be posting this in a different spot on the board). Thanks much for any help!

[Ocala Mike]

DRF Bets will probably balk at providing more than one set of IRS forms indicating the necessary withholding. Having said that, HOWEVER, the account holder should call their Customer Relations, and explain that there were numerous "partners" to see if they would be willing to do the bookkeeping on this (doubtful, especially if the partners did not already have DRF Bets accounts; also, probably illegal).

The way this is handled in real life is that the account holder (your friend) bears the brunt of the withholding and/or gets the benefit of the refund at tax time (assuming he's got a lot of offsetting losses). The other partners are paid their share of the NET by the account holder, and they settle with him, either plus or minus, at tax time.

[thaskalos]

Do you have any documented proof that the proceeds from the ticket were shared by the four of you?

[cougara]

Thanks for the replies, guys.

As far as documented proof goes, he sent us our equal share of the winnings via PayPal -- does that count?

I will have the account holder give them a call and see what they say ... I have a DRF Bets account, but two of the others do not, so it kind of sounds like we might be screwed either way here.

So, assuming they don't allow that, am I reading you correctly in that we should just have the friend pay all of the taxes at his personal tax rate and then reimburse him for that percentage?

[lamboguy]

i once was part of a large group that hit a signer in Palm Beach Hai-alai of all places. there were 20 of us and everyone signed there own wg2 form. the withholding's were divided up equally.

[iceknight]

Thanks for the replies, guys.

As far as documented proof goes, he sent us our equal share of the winnings via PayPal -- does that count?

I will have the account holder give them a call and see what they say ... I have a DRF Bets account, but two of the others do not, so it kind of sounds like we might be screwed either way here.

So, assuming they don't allow that, am I reading you correctly in that we should just have the friend pay all of the taxes at his personal tax rate and then reimburse him for that percentage?Just 2 cents here...not any actual tax advice..
You could just sign a letter documenting the amounts pooled in and the amounts pooled out to each and then use that as documentation for gambling winnings etc (with all names and dates involved). However, if any of you have an accountant friend, ask them for some tips on this method too. However, the paypal transfers plus some sort of signed letter could serve as documentation if there is any audit at any time.

[Ocala Mike]

i once was part of a large group that hit a signer in Palm Beach Hai-alai of all places. there were 20 of us and everyone signed there own wg2 form. the withholding's were divided up equally.

Wow, lamboguy, I'm sure Palm Beach Jai Alai loved you guys. If this happened at OBS, the new manager there would probably have a "conniption fit." Suppose one of the 20 was an illegal alien, or a documented foreign citizen, or didn't have a Social Security Number? Boggles the mind, although I guess Palm Beach was following the letter of the law.

In the case we're discussing, however, it's a little different because the bet went through one individual's account, so I don't think the ADW is required or even allowed to split anything up.

[lamboguy]

Wow, lamboguy, I'm sure Palm Beach Jai Alai loved you guys. If this happened at OBS, the new manager there would probably have a "conniption fit." Suppose one of the 20 was an illegal alien, or a documented foreign citizen, or didn't have a Social Security Number? Boggles the mind, although I guess Palm Beach was following the letter of the law.

In the case we're discussing, however, it's a little different because the bet went through one individual's account, so I don't think the ADW is required or even allowed to split anything up.if i am correct, on individual adw accounts you are not allowed to put in bets for other people. if i am correct and i am almost positive, the guy putting in the bet for someone else did something illegal.

[Ocala Mike]

Well, technically, you're correct, and that's why they will almost certainly only consider one actual winner who does all the reporting. You and I know, however, that in the "real world," things aren't so cut and dried, which is why the partners have to come up with some equitable adjustmest between themselves.

[lamboguy]

of course i know that, and most people don't abuse it either, but the law probably has something to do with bookmakers using the adw as a front or layoff office.

[iwearpurple]

I can speak from experience, having hit on a lottery ticket split by many people.

One person claims the winnings, and then distributes each persons winnings (less withholding) to each participant.

He then fills out IRS Form 5754, which lists each individual that has a part of the winnings. That form is then filed with the original payer of the winnings so that separate W2G forms can be filled out by the original payer (in this case, the ADW).

[AndyC]

I can speak from experience, having hit on a lottery ticket split by many people.

One person claims the winnings, and then distributes each persons winnings (less withholding) to each participant.

He then fills out IRS Form 5754, which lists each individual that has a part of the winnings. That form is then filed with the original payer of the winnings so that separate W2G forms can be filled out by the original payer (in this case, the ADW).

It works the same way with horses but it may be too late to involve the original payer. The following article offers a way that I believe should work. http://taxdood.com/2011/02/23/tax-implications-of-staking-arrangements-at-the-wsop/

[tanner12oz]

Each of you kick him 10% of your individual hits and buy him a case of beer...

[rrpic6]

It works the same way with horses but it may be too late to involve the original payer. The following article offers a way that I believe should work. http://taxdood.com/2011/02/23/tax-implications-of-staking-arrangements-at-the-wsop/


Awesome link! Too bad the IRS does not cut to the chase like that author! This writer gives hope to America!

RR

[Ray]

if i am correct, on individual adw accounts you are not allowed to put in bets for other people. if i am correct and i am almost positive, the guy putting in the bet for someone else did something illegal.

This is not illegal at all .. It may be against the rules of the sites but it not illegal for friends to partner up on a ticket on an ADW. Or place bets for people ... Every bet u place on your ADW is for you. How u got the money to bet or what u do with the winnings is totally on u. I can't imagine what law would be violated.


I also wouldn't hold my breath on the ADW splitting up the taxes may be better off not even getting the ADW involved and just set something up they an accountant who knows what they r doing. I'm almost positive there is a work around for this.

[lamboguy]

This is not illegal at all .. It may be against the rules of the sites but it not illegal for friends to partner up on a ticket on an ADW. Or place bets for people ... Every bet u place on your ADW is for you. How u got the money to bet or what u do with the winnings is totally on u. I can't imagine what law would be violated.


I also wouldn't hold my breath on the ADW splitting up the taxes may be better off not even getting the ADW involved and just set something up they an accountant who knows what they r doing. I'm almost positive there is a work around for this.there are reasons why adw's have rules for us not to put bets in for our firends. the main reason is that the adw is supposed to know the person that is making the bet. they are not supposed to take bets from people that live in certain states like new Jersey, texas, utah, hawaii and i am sure other's. an adw is not in business to help people circumvent laws.

if this doesn't make sense to you, call up your adw and they will explain it to you in greater detail

[lamboguy]

Wow, lamboguy, I'm sure Palm Beach Jai Alai loved you guys. If this happened at OBS, the new manager there would probably have a "conniption fit." Suppose one of the 20 was an illegal alien, or a documented foreign citizen, or didn't have a Social Security Number? Boggles the mind, although I guess Palm Beach was following the letter of the law.

In the case we're discussing, however, it's a little different because the bet went through one individual's account, so I don't think the ADW is required or even allowed to split anything up.

this was long before their was even simulcasting, we had to go to Palm Beach Hai-Alai to play the ticket.

[raybo]

there are reasons why adw's have rules for us not to put bets in for our firends. the main reason is that the adw is supposed to know the person that is making the bet. they are not supposed to take bets from people that live in certain states like new Jersey, texas, utah, hawaii and i am sure other's. an adw is not in business to help people circumvent laws.

if this doesn't make sense to you, call up your adw and they will explain it to you in greater detail

I would bet that any ADW would take a bet, from your personal betting account, regardless of where, or from whom those funds came from, as long as "you" can legally wager through them. How in the heck would they, or any other interested or related authority, know that the funds were not all yours anyway? Unless you told them, which would be rather stupid, in the first place, if you're betting for others, especially if those others are not able to legally bet through that ADW. Now, if you get audited by the IRS because you had more money in your account than could be documented by you (from reported earnings, etc..) that is another situation, but the ADW would not be involved in that situation, as they are not required to know where the funds you deposit in your betting account come from.

The warnings that the ADW posts on their site are for your protection, and not to protect themselves from any legal action. They are not held responsible for the "source" of the funds you deposit in your account. They have deposit options, and as long as you utilize one of those options, and can legally wager with them, they will gladly take your money. They couldn't care less where or how you got that money.

[lamboguy]

:faint: I would bet that any ADW would take a bet, from your personal betting account, regardless of where, or from whom those funds came from, as long as "you" can legally wager through them. How in the heck would they, or any other interested or related authority, know that the funds were not all yours anyway? Unless you told them, which would be rather stupid, in the first place, if you're betting for others, especially if those others are not able to legally bet through that ADW. Now, if you get audited by the IRS because you had more money in your account than could be documented by you (from reported earnings, etc..) that is another situation, but the ADW would not be involved in that situation, as they are not required to know where the funds you deposit in your betting account come from.

The warnings that the ADW posts on their site are for your protection, and not to protect themselves from any legal action. They are not held responsible for the "source" of the funds you deposit in your account. They have deposit options, and as long as you utilize one of those options, and can legally wager with them, they will gladly take your money. They couldn't care less where or how you got that money.if you date back to the year 2007 there was a wagering company by the name of IRG, that was shut down for this very reason. IRG was a division of the very largest ADW at the time called YOUBET. there were 2 people that pleaded guilty to this and wound up doing some federal time on this matter. YOUBET had to pay a fine. i know this because I was a customer of IRG at the time.. when they got shut down i was recruited as a rebate player by YOUBET.COM as a rebate player and they read me the riot act as to only betting for myself and the do's and don't of the matter. the reason why i was recruited by YOUBET was because i was a very large player and they wanted to boost their handle so that they could shop their business around for big money. they gave me a deal that they probably lost money on for a few years.

but this is not the only example that i have. i used to be a player in a wagering company owned by the TONKOWA INDIANS in Oaklahoma. this company got shut down by the Criminal Investigation Unit of the federal

government. there were no arrests or fines on this matter that i know of.

please don't confuse the fact that people do put bets in for their friends and nothing ever happens to them as being legal. we live in a world today that is full of drones, patriot acts, national security breeches, and we have lost most of our privacy if indeed there is any left.

[raybo]

:faint: if you date back to the year 2007 there was a wagering company by the name of IRG, that was shut down for this very reason. IRG was a division of the very largest ADW at the time called YOUBET. there were 2 people that pleaded guilty to this and wound up doing some federal time on this matter. YOUBET had to pay a fine. i know this because I was a customer of IRG at the time.. when they got shut down i was recruited as a rebate player by YOUBET.COM as a rebate player and they read me the riot act as to only betting for myself and the do's and don't of the matter. the reason why i was recruited by YOUBET was because i was a very large player and they wanted to boost their handle so that they could shop their business around for big money. they gave me a deal that they probably lost money on for a few years.

but this is not the only example that i have. i used to be a player in a wagering company owned by the TONKOWA INDIANS in Oaklahoma. this company got shut down by the Criminal Investigation Unit of the federal

government. there were no arrests or fines on this matter that i know of.

please don't confuse the fact that people do put bets in for their friends and nothing ever happens to them as being legal. we live in a world today that is full of drones, patriot acts, national security breeches, and we have lost most of our privacy if indeed there is any left.

So, exactly how did the ADW get in trouble? How did the government get involved in someone betting with friends' money. How did anyone find out that the money wasn't the person's that made the bet? Was the ADW aware that the person was betting with other people's money? And if so, how were they made aware of it. And, if they weren't aware of it, then how were they held responsible for it?

[PaceAdvantage]

I had to delete that last post. I have no idea if what you're writing is accurate and the names you are using are correct. Naming names is not important and is highly frowned upon especially when you are talking about criminal actions and it seems you're not 100% sure of what you type in terms of the details.

[lamboguy]

http://www.bloodhorse.com/horse-racing/articles/49357/brothers-charged-in-irg-investigation

sorry about that

[cj's dad]

I would suggest that you have your tax acct. do your taxes with and then without the pick 6 ticket. Assess the difference and act accordingly. For example, if without the ticket you would have a refund of say $1000 but with the ticket you have a liability if $3000 then you personally are in the hole for 4K. Divide that amount by the # of ticket holders (yourself included) and that is the amount each would owe you.