I have seen in the past that investment LLC's have claimed lottery winnings for people and I was wondering if this is done in order to keep the winner anonymous or for any other possible tax benefits.
John W
Favorite Answer
Forming a trust or corporation is usually a method of sharing the winnings amongst several people since many states require that there be only one owner of a winning ticket. It also avoids personal income tax but incurs commercial income taxes which are at 50%, of course there are many loopholes to commercial income tax so a properly managed trust/corporation would not necessarily be at a tax disadvantage and depending on how you wish to incorporate the corporation or form the trust and where you wish to live, you could get away with paying as little as 15% especially if you have claims to citizenships of countries that are friendlier to lottery winners such as the UK or Canada.
A trust or corporation that has more than $250,000 dollars to put into escrow can register as an insurance company and write insurance policies. That means that one way of benefiting from the assets without incuring any income is simply to have whatever medical insurance, car insurance, and home insurance you want on the terms that you want written to yourself. The high risk part of the insurance is repackaged as securities which the trust or corporation sells on the open market so if disaster does strike, it's still not out of your pocket even though you're effectively insuring yourself, you simply get the terms that you want. You can also benefit by having all your property owned by the trust and corporation and you can have all your expenses on an expense account with the corporation so in fact you can have all the advantages of having the money without actually owning the money as far as taxation is concerned and if the trust or corporation is offshore, you've structured your citizenship so that you won't be taxed by citizenship or by world income and you don't spend more than 4 months in any one country, then you'll be tax free after the obligatory 15% foreign investment withholding. Even if you want to stay in the States, you can have your corporation pay you a modest 40 k a year to keep the IRS happy and still have all your expenses go straight to the offshore trust/corporation.
Remaining anonymous is a major benefit of forming a trust or corporation to claim the winnings and it may be the key to being able to enjoy your new found wealth. Of course, if you didn't remain anonymous, all is not lost provided you're willing to stay out of the limelight till people's interest have waned. Whatever you do, don't start carrying briefcases full of cash to strip clubs and giving $2,000 a week allowances to anyone under 21.
moyle
Lottery Llc
pdq
Right. It has nothing to do with taxes, and everything to do with just wanting to stay anonymous to avoid every charity, and every charity-case friend from knocking on their door.
Not to worry though. You will NEVER have this problem. (Neither will I.)
Anonymous
You're not going to get out of paying taxes on it, not legally.
You can elect to have your name kept out of the papers, so that you won't be pestered by a lot of "long lost relatives."
So now you're up to speed. If you ever win a million dollars be sure and pay me half of it for giving you this sage advice.
?
i do not think so. I know they run some type of check before issuing the money. If you owe taxes they will take it out before they send you the check.