The good news: There was no
Mayan apocalypse.
The bad news: You didn’t win the
Powerball.
This past
year will undoubtedly be remembered for several important events – the Supreme
Court’s decision upholding Obamacare, the London Olympics and the reelection of
President Obama – to name a few. A recent article by The Estate Analyst, “The Year in Review – 2012: A Retrospective
of the Whole Shebang,” provides a somewhat comedic overview of this
year’s Supreme Court rulings, Tax Court cases, celebrity estates, and other
interesting events.
One notable
tax decision involved the Alabama Waffle House waitress who was given a lottery
ticket worth $10 million from a customer. The waitress, her parents, and her
siblings set up a corporation, which eventually claimed the winning ticket and
elected to receive annual payments of $354,000 for 30 years.
Not
surprisingly, other Waffle House employees claimed they were entitled to a
share of the winnings because all tips were to be shared. The IRS also claimed
its share by finding that the waitress had made a taxable gift by sharing the
lottery ticket with her family.
In Dickerson v. Commissioner, T.C. Memo 2012-60
(March 6, 2012), the Tax Court decided that: (1) the customer who gave the
waitress the lottery ticket did not make a taxable gift; (2) the waitress’s
former Waffle House co-workers were not entitled to any share of the lottery
ticket – which was a gift to the waitress and not a tip; and (3) the waitress’s
long-standing family agreement to share tickets was not binding, so a taxable
gift of 51% of the lottery ticket was made with a value of $1.1 million. A gift
tax delinquency of $771,000 was owed with interest and penalties.
To read about
the other tax, charitable and estate planning blunders of 2012, be sure to
check out this article.
For more information about estate planning in Torrance, CA please visit my website.
Reference: The Estate Analyst (December 2012) “The Year in Review – 2012: A Retrospective
of the Whole Shebang”