Quote:
Originally Posted by restorativejustice
People were approaching winners and saying "You pay me X dollars and I will let you report that I was a backer and you paid me my share which was X+Y (which was an amount that resulted in tax savings that far exceeded the money the player gave to the fake-backer)."
And, yes, that did happen.
But in this scenario the "approaching people" will be paying tax on money that they didn't actually receive.
Say tax rates of 20%.
Player A wins $100.
Player A gives Person B $10.
Player A reports that he gave Person B $60.
On the $100, Player A would get $100 and have $20 of tax. Net +$80.
Under the new "deal" Player A would get $90 and have $8 of tax. Net +$82. Good for Player A. But Person B would get $10 and have $12 of tax. Net -$2.
As far as I can see it, there is no way both parties can benefit from this unless:
(1) The "approaching person" will be in a lower marginal tax bracket than the player (this may be the case for a lot of non-large scores; are these "approaching people" usually pretty much completely broke with no income because I guess that would make sense), so that the "approaching person" would pay less in taxes on this "additional" income than the player would; or
(2) Somehow one of the parties involved is able to and will be committing some sort of tax evasion separate from this "deal".
Last edited by Lego05; 05-06-2015 at 08:05 PM.