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The Daily

Why Would You Buy $1100 Worth of Losing Lottery Tickets?

Chris Gaetano
Published Date:
Apr 9, 2015
SMALL BOX NO. 2If you won the lottery, what would you buy? A boat? Two boats? Two boats plated in gold with your name written on the hull in diamonds? If, instead, your answer is "thousands of dollars worth of losing lottery tickets" then you might be someone who has heard of a scam that gamblers use to minimize their tax burdens and throw off IRS auditors, according to the Daily Beast. Here's the deal: gamblers need to pay taxes on their winnings, but are able to offset from this sum their losings. So if a $10,000 jackpot was preceded by $5,000 in losses, you'd only pay tax on half the amount. But what if you're too lucky and won all that without any loss whatsoever? You'd be stuck with a higher tax bill. Unless you decide to use your winnings to buy up some extra losses--and if the auditor comes by, you'd show them all your losing tickets as "proof" of your losses. This scheme has led to numerous people offering bundles of losing lottery tickets for sale for the explicit purpose of fooling auditors. Some businesses have even arisen that simply rent them out for the day the auditor arrives. All this is, of course, highly illegal, and fairly simple for any auditor worth their salt to figure out. After all, notes the Daily Beast, there's no actual use for losing lottery tickets. Most people just throw them out. So why, the auditor may ask, do you have so many? And sorted so neatly, too? Perhaps it's best to just forget the whole thing and pay the tax.