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Wagering with a group: Who pays the tax?

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An old joke goes like this: Woody takes his yearly trip to Las Vegas. His friend, Dave, gives Woody $500 and tells him to bet it all on lucky number 22 at the roulette wheel. Woody dutifully takes the money and, upon arriving in Sin City, he goes straight to the wheel and plunks $500 down on Number 22. Amazingly, Number 22 hits, and Woody wins $17,500. After raking in all the chips, Woody says, “Wow, that sure was a lucky number. Now I guess I’d better make the $500 bet on Number 22 for Dave.”

If you’re not as ethically challenged as Woody, you at least split the winnings with your fortunate pal. And the word from the IRS is that you can share the tax obligation as well. Form 5754 covers those situations and alerts the IRS that more than one person actually won the prize.

Casino Gambling For Dummies

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