If I donate lottery ticket before the drawing- what the tax implication?

RaviChr · #1 (**permalink**) 05-11-2017, 08:33 PM

I want to understand tax implication for this scenario. Let's say there is 1 million cash payout on a jackpot. If a person buys the ticket for dollar and donate it to charity in the donation box before the drawing is made, and that ticket wins jackpot, my understanding is that the person donating the ticket will not get taxed on payout because what the person donated is only a dollar. The charity is tax exempt and it received a donation of value 1 dollar which later became 1 million, and I believe they will not be taxed. So charity should get the whole 1 million jackpot without paying any tax.

Am I correct? Because I would like to donate the ticket before the drawing and if they are lucky, they would get whole amount. If I get the jackpot, even if I'm ready to give it all, I will end up paying tax for 50% of the jackpot.

Appreciate your help!

Wnhough · #2 (**permalink**) 05-15-2017, 03:08 PM

Quote:

Originally Posted by RaviChr

I want to understand tax implication for this scenario. Let's say there is 1 million cash payout on a jackpot. If a person buys the ticket for dollar and donate it to charity in the donation box before the drawing is made, and that ticket wins jackpot, my understanding is that the person donating the ticket will not get taxed on payout because what the person donated is only a dollar. =>>Correct; since you have completely donated it to the charity; any part of it no longer belongs to you

The charity is tax exempt and it received a donation of value 1 dollar which later became 1 million, and I believe they will not be taxed. So charity should get the whole 1 million jackpot without paying any tax.=>>correct

Am I correct? Because I would like to donate the ticket before the drawing and if they are lucky, they would get whole amount. If I get the jackpot, even if I'm ready to give it all, I will end up paying tax for 50% of the jackpot.====>>yes you are correct.

Appreciate your help!

I want to understand tax implication for this scenario. Let's say there is 1 million cash payout on a jackpot. If a person buys the ticket for dollar and donate it to charity in the donation box before the drawing is made, and that ticket wins jackpot, my understanding is that the person donating the ticket will not get taxed on payout because what the person donated is only a dollar. =>>Correct; since you have completely donated it to the charity; any part of it no longer belongs to you

The charity is tax exempt and it received a donation of value 1 dollar which later became 1 million, and I believe they will not be taxed. So charity should get the whole 1 million jackpot without paying any tax.=>>correct

Am I correct? Because I would like to donate the ticket before the drawing and if they are lucky, they would get whole amount. If I get the jackpot, even if I'm ready to give it all, I will end up paying tax for 50% of the jackpot.====>>yes you are correct.