TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, March 31, 2008

Ethical and Tax Considerations in Winning an NCAA Tournament Office Pool

Ncaa_3In light of the current standings in our NCAA basketball tournament pool, the post by Lisa Fairfax (Maryland) caught my eye:  Brackets and the Workplace:

I had the chance to read a story in the Pittsburgh Post-Gazette on the pros and cons of allowing employees to participate in office bracket pools. Indeed, some offices have sought to ban such pools. Apparently not because they may be illegal. But rather because they may have a negative impact on employees and the workplace. To be sure, one research firm estimates that the distraction created by basketball office pools will cost employers some $1.7 billion in wasted work time. This estimate is based on wasted time spent on bracket-related activities from "trash talking at the water cooler" to "watching live videos of the games during business hours." In addition, to the wasted time, one employment lawyer notes that bracket pools in the office invite trouble because things may go awry. Such as when someone believes they should have taken first prize and instead gets third place, or worse, when the CEO wins first prize, after having pooled money with "the people in the mailroom and the messenger." If this happens, the advice is that the CEO should buy everyone lunch instead of pocketing the money.

If UCLA beats Kansas for the championship, should I treat the students to lunch?  If so, do I have income with no offsetting deduction?  Comments are open for some free advice!

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Your question got me thinking. If a taxpayer in a high tax bracket had significant gambling income, could they circumvent lucas v. earl by taking their (21 yr. old) child into a casino, and intentionally losing money to them? It would be fairly easy at a poker table to ensure that you lost exactly the amount you wanted to, and that you only lost it to the target of your income shifting. You would have to pay the casino's cut, but if your target is in a low enough tax bracket, you could still come out considerably ahead.

Posted by: yf | Mar 31, 2008 3:38:16 PM