I was just discussing this with some coworkers and no one could figure out how it would work.
If your group of however many people wins the lottery, how does it get divided, logistically? Is the money paid to one person and that person distributes everyone’s share, or will the Lottery cut individual checks, or what?
A friend of mine who won a middling amount as part of a very small group told me that the lottery office cut them individual checks. (Arizona state lottery, YMMV.)
I asume the lottery ticket is endorsed as “The Acme Repair Shop Group” and when the names are supplied, each member gets a promise their cheque will be delivered as soon as the lawsuits from disgruntled former members are dealt with…
“The Lottery can pay a group of 2 to 10 people individually and provide each person with an IRS form W-2G,
Statement For Certain Gambling Winnings, for their portions of the prize.
When the prize is to be shared by a group of more than 10 people, the best approach is for the group to create
a formal organization such as a trust, a partnership, or a corporation. If an organization claims a prize, the
group must obtain a separate taxpayer identification number (called a “Federal Employer Identification Number”
or “FEIN”) from the Internal Revenue Service and submit that number with the prize claim so that it can
be used by the Lottery to report the taxes withheld. When the organization receives the lottery prize installments,
the Lottery pays the prize in the name of the trust, partnership or organization to a group representative who in turn is responsible for paying each member of the group their portions
of the prize and providing each member with a Form W-2G for tax reporting purposes.
The decision on whether to claim as an individual or as a group is important
because of the income and tax accounting implications and because once a prize has been awarded the
Lottery cannot change the identity of the prize winner without a court order. If there is any possibility of
sharing the prize, it is recommended that you seek advice from an attorney, an accountant, or both before
finalizing your prize claim.
Any questions you or your advisors have about this issue should be directed to the Lottery’s Prize
Payment Office.”
Bottom line (in my view): Check with your local lottery office.
Follow-up question: if there are multiple winners, let’s say there are three, and one of them doesn’t claim his share by the deadline, do the other 2 winners split the unclaimed amount or does it go back into the pool?