Regrettably, you did not win the $587.5 million Powerball lottery. And,
although you survived the Mayan apocalypse, this is no time to relax. We have
segued right over the “fiscal cliff” and into the new economic reality zone.
year will undeniably be remembered for several important events, such as the
Supreme Court’s decision upholding Obamacare, the London Olympics and the
reelection of President Obama. In order to recap this year’s Supreme Court
rulings, Tax Court cases, celebrity estates, and other interesting events, a
recent article, “The Year in Review – 2012: A Retrospective
of the Whole Shebang” by The
Estate Analyst, took a comedic approach to what has passed in 2012.
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.
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.
Be sure to
explore the above-mentioned article to review other tax, charitable and estate
planning missteps of 2012.
Reference: The Estate Analyst (December 2012) “The Year in Review – 2012: A Retrospective
of the Whole Shebang”