Best way to avoid double taxation on stakes/shares

[scaryjerry]

I won an entry into the Aussie Millions Main Event in Melbourne. In order to offset some of my travel expenses I decided to sell off some shares of my action.

I have a question that maybe you can help answer.

Right now I have 3 ppl buying 5% of my action each. I dont really plan on selling anymore. If I cash at a lower level and the shares are <10k, I plan on just gifting the money to my friends. If I am so lucky as to take down the AM first place pays 1.5m AUD. So each person would get a theoretical 75k (obviously less after taxes).

What would be the best way to avoid double taxation? I dont want to pay taxes on 1.5m, and then have my friends turn around and have to pay taxes on 75k.

Will the casinos let you disperse the prize purse between 2 or more persons for tax purposes?

[BigBuffet]

Easy. Just 1099 them.

[adanthar]

Write out a contract beforehand spelling out all of the terms and have them sign it. You don't need a legal background for that to stand up in court or to the IRS, it just needs to be thorough and legible.

This also avoids the Lester/Gold drama.

[boedeker]

Please avoid berating me:

There are more creative ways to avoid the entire tax burden. When you win the AM you will/can be paid in casino chips (well at least you could when I played a few years ago). I would suggest winning it. Take the full cash value, lock it up, call an expensive tax attorney in the US. Relax.

[BigBuffet]

Whenever I have been paid in casino chips I still get a W2G or 1099Misc. Either of those gives the IRS a heads up.

[boedeker]

this tournament is in australia.

[DoGGz]

yea, they aren't going to give you an american tax form.

[MODEVIL]

the fact that the tournament final table is aired in the US is probably -EV on not paying your taxes.

[pomhat]

without knowing the US tax system well (live in Australia) surely there would be a mechanism whereby you wouldn't be taxed on the whole 1.5M winning. Rather, you would be taxed on 1.5M less what you had to give to your backers.

The backers themselves would be taxed on what they receive from you (possibly less the original stake if thats considered capital).