1099-MISC + redistribution

[spencir]

What is the name of your state? UT

I won a sweepstakes for a fairly large group of people to have dinner and go to a concert, for which the company awarding the prize gave me a 1099-MISC with box 3 ("other income") filled. In turn, I am planning to fill out a 1096 and provide 1099-MISC forms to the people I invited (I discussed this plan previous to the event, of course!) for their share of the prize to lessen my tax burden.

First, I would really appreciate any advice in general on my plans - this will be my first real foray into the tax world (up till now haven't ever really made enough to have any worries). I have been doing my own investigations into the various forms and their instructions, but I don't feel like any expert yet by any means.

Second, I've been having a hard time getting this all into TaxCut Premium Federal + State + e-File. In the form for entering 1099-INT income I can specify that not all the interest income belongs to me, but there is no such option for entering 1099-MISC information. Am I stuck, or can I use the 1099-INT box to put the information regarding 1099-MISC forms I issue into TaxCut?

Thanks for your help!

[LdiJ]

Originally Posted by spencir

What is the name of your state? UT

I won a sweepstakes for a fairly large group of people to have dinner and go to a concert, for which the company awarding the prize gave me a 1099-MISC with box 3 ("other income") filled. In turn, I am planning to fill out a 1096 and provide 1099-MISC forms to the people I invited (I discussed this plan previous to the event, of course!) for their share of the prize to lessen my tax burden.

First, I would really appreciate any advice in general on my plans - this will be my first real foray into the tax world (up till now haven't ever really made enough to have any worries). I have been doing my own investigations into the various forms and their instructions, but I don't feel like any expert yet by any means.

Second, I've been having a hard time getting this all into TaxCut Premium Federal + State + e-File. In the form for entering 1099-INT income I can specify that not all the interest income belongs to me, but there is no such option for entering 1099-MISC information. Am I stuck, or can I use the 1099-INT box to put the information regarding 1099-MISC forms I issue into TaxCut?

Thanks for your help!

No, you cannot use the 1099 INT box to enter the 1099 MISC. As to how to handle it, I couldn't answer that without doing research, and this time of year I dont' have time to do research unless I am getting paid for it.

Maybe one of the other tax professionals who respond here will know how to handle it off the top of their heads.

[Dandy Don]

What is the dollar value of this prize?

It would be most improper for you to be sending 1099-MISC forms to ANYONE. You were the official winner of the prize and you must bear the entire tax burden if there is any. You should be consulting with a tax professional in person about this or try experimenting with some of the other tax preparation software (Turbo-Tax, etc.) to see if they would accept the information you are providing.

DANDY DON IN OKLAHOMA (tiekh@yahoo.com)

[tranquility]

I agree with LdiJ and disagree with Dandy Don. I know that such syndicates have the tax burden distributed between the members. However, I have no actual experience and cannot tell you how this is accomplished without research.

[TinkerBelleLuvr]

Even if he can issue 1099-misc to the others, the deadline to the others was 01/31/2008. The deadline for the 1096 to the IRS is 02/29/2008.

[tranquility]

I just re-read the OP's post, and I was wrong. Dandy Don was right. I thought the group had won the prize and the OP wanted to not get all the income for the group's winnings. It appears he won the prize and is trying to assign the income to those who profit from it.

You cannot assign income (unless to a charity) form a prize in this manner. The OP is on the line for the entire amount unless he unequovically refuses the prize.

[spencir]

To everybody who replied, thanks very much for your quick responses and all the information. To those who said it was wrong to send 1099-MISC forms, can you provide any references or particular instructions from the IRS to read up on that? This isn't about not believing what you say, but I would like to read from the source so I understand all the details. I would really appreciate some links or pointers on where to look. When I looked on the IRS's site I had a hard time finding specific information for my situation.

Another idea I'm wondering about is (instead of distributing 1099-MISC forms), providing a schedule of nominee distribution attached to my tax return detailing names, SSNs, and amounts that total to the amount of the prize. I do recognize that this strategy wouldn't hold under your general advice that it is improper to distribute award taxes - I'm just wondering if there are any other thoughts about that idea in particular.

Thanks again.

[tranquility]

As I said, I misread your post with my first answer. The income is yours. Period. You have no "nominee" beneficiaries, you are trying to assign income. This is not allowed. For the taxability of prizes, see:
Reg. Section 1.74-1(a).

For a discussion on why you are in constructive receipt of the award, see:
Rev. Rul. 58-127.

You are SOL. It is your income unless you unconditionally refuse the prize. You cannot give some of the income to another.