Posted on 07/24/2020 6:31:28 AM PDT by lowbridge
A western Wisconsin man will share his millions in lottery winnings with a longtime friend because of a promise they made to each other nearly three decades ago.
Friends Tom Cook and Joseph Feeney shook hands in 1992 and promised that if either of them ever won the Powerball jackpot, they would split the money.
That promise came to fruition last month when Cook bought the winning ticket for a $22m jackpot at Synergy Coop in Menomonie.
When Cook called to give his friend the good news, Feeney couldn’t quite believe it.
“He called me, and I said, ‘are you jerking my bobber?”’ said Feeney, an avid fisherman.
Cook retired after hitting the jackpot while Feeney was already retired. Neither has any extravagant plans for the winnings but each is looking forward to enjoying more family time.
(Excerpt) Read more at theguardian.com ...
“‘are you jerking my bobber?”’
It doesn’t get anymore “Wisconsin” than that. Lol!
That would be an interesting case. Arguments against it being a contract would be lack of consideration (this assumes they weren't pooling their money to buy tickets) and lack of a writing (both for evidentiary reasons and as a potential violation of the statute of frauds). His friend's "are you jerking my bobber" statement suggests that the friend didn't view them as having an enforceable contract.
Nope.
You can gift up to $15k per person per year with no tax implications. Once you exceed that, you must file a gift tax return and anything over the $15k will decrease the available amount of your unified credit but will not result in a tax until you no longer have any unified credit remaining. So in 2020 you could gift $15K per person plus $11.5m without paying any gift tax. Any gifts above that will result in gift tax and upon your death you would have to pay estate tax on the entire value of your estate (assuming you didn't will it to a surviving spouse, charity, etc.) (Tax attorney here.)
I’m pretty sure there have been a number of cases where the less fortunate friend has tried to enforce such a mutual promise with the mutuality in understanding that they both will be purchasing tickets half for the other in the future to be the recipient being the consideration. I imagine those cases largely have turned on differing recollections as to whether such a pact has been made. Not sure the written part would be so important if they agree on and attest to the same details? And as to the friend’s expression of shock, that could be simply of the winnings, were he not aware of them—or that the friend was volunarily coming through on auch a contract. As a longtime friend the beneficiary may have already thought that such attempted enforcement on his part wasn’t worth losing the friend.
Also, the recollected handshake I imagine would reinforce their case as well.
Yeah, well, when the winner blows through his millions, he’s going to regret his “generosity.”
Thanks for the clarification. Been a long time since I did tax accounting (college course). Things have certainly changed.
Granted, but for 5.7 million, Id gladly take that ripoff.
Or one could invest that 5.7 million, or a large part of it, in something else and get a better return than 57 thousand a year. Maybe buying rental properties.
I am guessing they are er... close friends.
Yes, it would be a highly fact-based case. I don’t think the IRS would care too much about this case, though, because the unified credit is so much higher than the amount given to the friend. Of course, if the winner was in a significantly higher tax bracket than the friend or had a very high net worth aside from the winnings, the IRS could take the position that this was an attempt to shift income tax or estate and gift tax obligations to another in order to reduce the overall taxes associated with the winnings.
You mean if it weren’t taken as a lump sum, but spread out over time, I presume. I would think there’d have to be solid evidence for such a charge.
Amen. We’re living in slut times.
It wouldn’t be a charge; it would be an argument by the IRS that there was no contract and the payment to the friend was a gift.
I mean it in the casual sense of the word.
And if they and the IRS held to opposing positions, I take it there would be charges filed.
No, it would be a civil matter. It would not rise to the level of criminal fraud because the taxpayer does have an arguable position even if that position doesn't ultimately prevail. If the IRS disagreed with the taxpayer's position, it would just disallow the tax return(s) and assess tax based on what it believed to be the correct filing. It would then be up to the taxpayer to challenge the IRS position, first with the IRS itself and, barring a settlement with the IRS, then in tax court.
And if the tax court ruled against them, but they didnt pay...
What a ripoff.
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Not really! The biggest reduction is in taking the winning as cash. It is the Net present value of a certain dollar amount taken annually over a 20 year time period. What is left is divided by 2 for each participant. Each participant pays taxes on what is actually received.
look up verbal contract, which btw are binding His friend could take him to court and would win.
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