This pastyear will undeniably be remembered for several important events, such as theSupreme Courtâ€™s decision upholding Obamacare, the London Olympics and thereelection of President Obama. In order to recap this yearâ€™s Supreme Courtrulings, Tax Court cases, celebrity estates, and other interesting events, arecent article, â€œThe Year in Review â€“ 2012: A Retrospectiveof the Whole Shebangâ€ by TheEstate Analyst, took a comedic approach to what has passed in 2012.
One notabletax decision involved the Alabama Waffle House waitress who was given a lotteryticket worth $10 million from a customer. The waitress, her parents, and hersiblings set up a corporation, which eventually claimed the winning ticket andelected to receive annual payments of $354,000 for 30 years.
Notsurprisingly, other Waffle House employees claimed they were entitled to ashare of the winnings because all tips were to be shared. The IRS also claimedits share by finding that the waitress had made a taxable gift by sharing thelottery ticket with her family.
In Dickerson v. Commissioner, T.C. Memo 2012-60(March 6, 2012), the Tax Court decided that: (1) the customer who gave thewaitress the lottery ticket did not make a taxable gift; (2) the waitressâ€™sformer Waffle House co-workers were not entitled to any share of the lotteryticket â€“ which was a gift to the waitress and not a tip; and (3) the waitressâ€™slong-standing family agreement to share tickets was not binding, so a taxablegift of 51% of the lottery ticket was made with a value of $1.1 million. A gifttax delinquency of $771,000 was owed with interest and penalties.
Be sure to explore the above-mentioned article to review other tax,charitable and estate planning missteps of 2012. And when you're ready to put your own estate plan together call Idaho Estate Planning and we'll make sure you don't end up on a similar list in the future. Remember, good planning is no accident.