Paul L. Caron

Monday, February 6, 2012

Did Taxes Force Lottery Ticket Buyer to Forgo $14 Million Prize?

LottoJoe Kristan, Could Someone Have Tax Problems Big Enough to Walk Away From $14 Million?:

That’s one explanation for a weird story where a New York lawyer acting on behalf of holder of a winning lottery ticket purchased at a Des Moines convenience store let the ticket expire rather than revealing the identity of the ticket owner.  

The ticket was turned in hours before its expiration by a Des Moines law firm hired by a New York attorney employed by a Belize trust claiming to be the ticket owner.  The lottery wouldn’t approve the prize without knowing who was behind the trust, and the trust wasn’t telling.  Apparently $14 million wasn’t enough money to get the human(s) behind the trust to come out of the cold.
It’s hard to imagine what would cause somebody to walk away from a $14 million prize. ... Could unpaid taxes be the problem?  Belize is noted as a tax haven,  Could the winner be a Des Moines millionaire-next-door who has been stashing money illegally in Belize, didn’t want to draw attention, and was willing to claim the prize only anonymously?  If so, it seems like a play gone wrong.  Winning the lottery would seem to be a godsend for a tax evader. Suddenly nobody would think twice about your new sports car and big house in Florida.

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Posted by: Matt | Feb 7, 2012 3:08:40 PM

It's a shame that an item this far out in left field gets so much attention when there are serious issues to be settled, but since I got sucked in too, ...

Why didn't the winner just give it to the local food bank manager and let him claim the prize and then (magnanimously) donate the winnings (after taxes) to the food bank.

Having an attorney make a public statement isn't exactly the best way to keep a low profile.

Posted by: J. Wiedwald | Feb 6, 2012 10:52:13 PM

Unclaimed property. Most states have unclaimed prizes return to the pot. Not necessarily, I bet. A patient gangster can claim the unclaimed prize later, no pesky 1099s required.

Posted by: jim harper | Feb 6, 2012 9:49:00 PM

I wish they were a tenth concerned about identifying illegal voters.

Posted by: Woody | Feb 6, 2012 8:37:10 PM

A recent Freakonomics podcast reported that some states allow an individual who wants to break a gambling habit to sign up for a program under which the individual agrees that and further gambling will be deemed criminal and any winnings would be forfeited. Something like this could be involved although I would put my money on a tax evader.

Posted by: Bill | Feb 6, 2012 6:38:07 PM

Once the trust came forward on behalf of one or more unnamed human prizewinners, doesn't an issue of constructive receipt arise?

Posted by: Jake | Feb 6, 2012 2:01:19 PM

Did you know DE used to allow winners of lotteries remain annonymous? To my knowledge, they still do.

Posted by: Dr. K | Feb 6, 2012 1:03:49 PM

The only other explanation anyone has mentioned that even makes some sense is that the purchaser was a minor, unable to claim the prize under his/her own name. In that circumstance, a failure to claim would make sense as well.

Posted by: Anon | Feb 6, 2012 12:41:02 PM

Why not just give the ticket to someone else. Truly bizarre.

Posted by: Len Burman | Feb 6, 2012 12:27:35 PM