this guy says he will even have to pay taxes on the value of the trip...but since from texas no state taxes...
http://dontmesswithtaxes.typepad.co...05/kentucky-derby-bettor-irs-big-winners.html
What about the IRS? I wish NBC had also had a camera at IRS headquarters; OK, at a Derby party full of the agency's employees. I suspect those folks were almost as thrilled as Fullerton since the day's other big winner was Uncle Sam.
All you tax-wise readers already know that gambling proceeds are taxable.
In this case, Churchill Downs didn't have to withhold federal tax upfront. That's required only when the winnings minus the wager exceed $5,000 AND the winnings are at least 300 times the wager. Fullerton wasn't that lucky!
But I suspect tracks, casinos and other such venues offer the withholding option to big winners.
Regardless, there's no way, thanks to all the publicity, that Fullerton could try to pull a Richard Hatch and not give the IRS its due.
I wish, though, that NBC, which spent most of the hours leading up to post time on a variety of canned features only tangentially related to the horse race itself, had opted to have a CNBC talking head on hand after the race.
That business channel commentator then could have told viewers, or interviewed a tax expert about, the tax implications of the big winnings.
And now you know why I'm not a television programmer!
What about the amount bet? The discussion also could have covered just how the $100,000 that Fullerton bet on the race figures into things.
The of contest material says the Derby Dream Bet winner gets, among other things, "A free $100,000 win wager on a horse in the 136th Kentucky Derby."
Does that amount also count as income for Fullerton? Could the tax man argue that Fullerton constructively received it? Or did he not ever have any type of ownership of the money that he bet on Super Saver?
Should it be included for tax purposes as part of the prize package's overall value?
And speaking of that, there's no question that Fullerton will owe tax on the value of the trip to and lodging and amenities in Louisville that were part of his grand prize.
OK, tax geeks, your thoughts, please, on Fullerton's ultimate Kentucky Derby tax liability.
I do know that Fullerton has at least one thing working in his tax favor. Being a Texan, he doesn't have to worry about a state income tax on his winnings.
Another Texas winner: Saturday's Kentucky Derby produced another windfall for another Texan.
Austin resident Eric Samuelson drove down to Retama Park just northeast of San Antonio and bought a $1 superfecta ticket. He won $101,284.
In Samuelson's case, the federal withholding requirement kicked in. He took home a check for around $75,000.
http://dontmesswithtaxes.typepad.co...05/kentucky-derby-bettor-irs-big-winners.html
What about the IRS? I wish NBC had also had a camera at IRS headquarters; OK, at a Derby party full of the agency's employees. I suspect those folks were almost as thrilled as Fullerton since the day's other big winner was Uncle Sam.
All you tax-wise readers already know that gambling proceeds are taxable.
In this case, Churchill Downs didn't have to withhold federal tax upfront. That's required only when the winnings minus the wager exceed $5,000 AND the winnings are at least 300 times the wager. Fullerton wasn't that lucky!
But I suspect tracks, casinos and other such venues offer the withholding option to big winners.
Regardless, there's no way, thanks to all the publicity, that Fullerton could try to pull a Richard Hatch and not give the IRS its due.
I wish, though, that NBC, which spent most of the hours leading up to post time on a variety of canned features only tangentially related to the horse race itself, had opted to have a CNBC talking head on hand after the race.
That business channel commentator then could have told viewers, or interviewed a tax expert about, the tax implications of the big winnings.
And now you know why I'm not a television programmer!
What about the amount bet? The discussion also could have covered just how the $100,000 that Fullerton bet on the race figures into things.
The of contest material says the Derby Dream Bet winner gets, among other things, "A free $100,000 win wager on a horse in the 136th Kentucky Derby."
Does that amount also count as income for Fullerton? Could the tax man argue that Fullerton constructively received it? Or did he not ever have any type of ownership of the money that he bet on Super Saver?
Should it be included for tax purposes as part of the prize package's overall value?
And speaking of that, there's no question that Fullerton will owe tax on the value of the trip to and lodging and amenities in Louisville that were part of his grand prize.
OK, tax geeks, your thoughts, please, on Fullerton's ultimate Kentucky Derby tax liability.
I do know that Fullerton has at least one thing working in his tax favor. Being a Texan, he doesn't have to worry about a state income tax on his winnings.
Another Texas winner: Saturday's Kentucky Derby produced another windfall for another Texan.
Austin resident Eric Samuelson drove down to Retama Park just northeast of San Antonio and bought a $1 superfecta ticket. He won $101,284.
In Samuelson's case, the federal withholding requirement kicked in. He took home a check for around $75,000.
He has to pay taxes, he just doesn't have it taken from the IRS window at Churchill. He's on the 'honor system' and is required by law to report the money as income. Now ordinarily you'd say no big deal, just don't report it but given the event, the television coverage AND the rug, I don't think he's going to be able to "forget" to report the 900K
