Quote:
Originally Posted by Track Phantom
Does anyone know if a horse racing betting syndicate is totally legal?
I have about 40 people contributing to a bankroll for the Breeders' Cup that we'll be putting in large bets. If we win, I collect the money and pay out everyone their share. I'm just curious if there is anything illegal these days with doing that. Imagine hitting 4,000,000 and having to cut $100,000 checks to 40 people. That could get attention.
Not even sure who to ask.
|
As the "administrator" of the syndicate, you will be required to file Form W-2G and complete Form 5754 which will show the Irs that you are not the sole winner of the wager. Otherwise you will be liable for tax on the entire winnings. It's also a bit of work and responsibility that you should be compensated for.
From The IRS:
Horse Racing, Dog Racing, Jai Alai, and Other
Wagering Transactions Not Discussed Later
File Form W-2G for
every person to whom you pay $600 or more
in gambling winnings if the winnings are at least 300 times the
amount of the wager.
Withholding
If the winner of reportable gambling winnings doesn't provide
a TIN, you must backup withhold at the rate of 24% on any such
winnings that aren't subject to 24% regular gambling
withholding. That is, backup withholding applies if the winnings
are at least $600 but not more than $5,000 and are at least 300
times the wager
https://www.irs.gov/pub/irs-pdf/iw2g.pdf
Use Form 5754, Statement by Person(s) Receiving Gambling
Winnings, to prepare Form W-2G only when the person
receiving gambling winnings subject to reporting or withholding
isn't the actual winner or
is a member of a group of two or more
people sharing the winnings, such as by sharing the proceeds of
the same winning ticket. The payer is required to file Forms
W-2G based on Form 5754
https://www.irs.gov/pub/irs-prior/iw2g--2018.pdf
