[FlyFishDive]

With all the talk of the various tournaments, I was wondering how crews handle splitting up the winnings if they place in the money.

Lets say a boat with 4 people wins 100k or more and they are doing a even split, how are things like taxes handled? Does each guy get a 25k check from the tournament and each be responsible for claiming income or does one entity get the 100k and the estimate taxes and then split the balance etc... Or, do you form a fishing team business and split it that way?

Thanks,

 

[06405]

One check is given in a tourney to the crew. The person thats name is signed up for the tourney usually the captain/owner of the vessel the check is made out to him. Then he will usually split it with the rest of the crew how ever he would like to or agreed upon. Usually a percentage is taken out for the boat and the rest for him self and the crew.So really if it was 4 guys in the crew the prize money would be split 5 ways including the boats share this is how most people go about splitting the winnings.

 

[blackdiamond296]

The way to split winnings that makes the most sense to me is to pay for the day's expenses off of the top, then split the remainder equally between the captain and crew, with one full share going to the boat. The idea behind giving a share to the boat is that it helps to defray the costs of running and maintaining a boat for a season's fishing- something i think everyone will agree is pretty expensive!!!

 

[MakoMatt]

We do it the way blackdiamond suggests, but suppose for a minute that you were in the BIG DOG SHOOTOUT, and you were fishing one day with your boss or someone like that who might not be regular crew or even knew you were entered in the Shootout, and it turned out you won.

Would you say to them on August 1st.,............. you remember that fishing trip that we caught the Mako, well, I owe you some money!!!

FlyFishDive wrote:
how are things like taxes handled? Does each guy get a 25k check from the tournament and each be responsible for claiming income or does one entity get the 100k and the estimate taxes and then split the balance etc...
In tournaments where you know you're getting a 1040, like the Hudson Anglers, that's how I do it. I first deduct estimated taxes that I will have to pay, then the expenses come off the top, and the balance is split evenly between myself, and the crew with one share going to the boat.

Now I never asked, and I doubt they would do it, but if for tournaments that do send 1040's, if they were willing to write a check for each crew member, with 2 shares going to the boat owner, I would do it that way and let the guys take care of their own taxes, but I doubt very much they would do that.

MakoMatt

This post edited by MakoMatt 05:00 AM 03/28/2008

 

[JESSIELEE]

MakoMatt wrote:
Now I never asked, and I doubt they would do it, but if for tournaments that do send 1040's, if they were willing to write a check for each crew member, with 2 shares going to the boat owner, I would do it that way and let the guys take care of their own taxes, but I doubt very much they would do that.

MakoMatt

When we placed in Star Island a few years back they would have written as many checks as we wanted.

 

[MakoMatt]

Thanks Joe, I stand corrected, that's good to know.

MakoMatt

 

[FlyFishDive]

I agree with expenses first and share for the boat, I was just keeping it simple to look at the tax end of it.

I guess if the tournament is not giving out 1099's or reporting the payout some how, then taxes don't come into play.

If the capt has to show an additional 100k income because he got the check and then redistributed to the crew, he would be taking a big hit tax wise. So, if you estimate the taxes then split the rest, then the capt cuts a check to each crew member, wouldn't that be considered a gift and then gift taxes get involved.

Just trying to get an idea of how these things work. Thanks for the replies.

 

[makoexpress]

Mako Mania

When we hit in the Mako Mania Touney Star Island wrote two checks. one for the tourney money and one for the calcutta money. I deducted the cost of the trip and then split the rest equally. This is only done of course if everone puts in to the money equally.

 

[HungryJack]

Costing yourself and the crew MONEY

MakoMatt wrote:
I first deduct estimated taxes that I will have to pay, then the expenses come off the top, and the balance is split evenly between myself, and the crew with one share going to the boat.
MakoMatt
Sorry, that is not the right or smart way to do it.

First, you have increased your income for the year a disproportionate amount,
increasing your tax liability on all your regular income at the same time.

Second, if your tax bracket is higher than those of your crew,
they are receiving less money overall than they should.

The proper way,
and the way that has the least NEGATIVE tax effect on yourself and others is
for one person to accept the check,
then cut checks for the FULL SHARE (no tax withheld) to each participant,
and issue them each a 1099.

Any other method will cause an unnecessary tax burden or overpayment for all those involved,
and technically,
they would have to pay double taxes once they deposited your check,
it would count as taxable income even though you already paid tax on it.

Surprised none of the many accountants or tax attorneys on this site didn't point this out sooner.
Thats ok, HJ is here to pick up the slack for them

This post edited by HungryJack 11:56 AM 03/28/2008

 

[Squeri Boy]

Hungry jack is correct.

When we won the Hudson anglers in 2001, our accountant suggested we do it that way to benefit all on the boat and not hurt anyone with a tax burden.

Boat got a share as well.

 

[MakoMatt]

HJ, thanks, that makes a lot more sense.

MakoMatt

 

[MakoMike]

H'mm, somehow I missed this thread this morning. HJ has it right. Don't forget the send out the 1099s, there is a penalty for not sending them out by Jan. 31st of the succeeding year.

 

[HungryJack]

One day at a time....

Trying to make my Mentor

on this site proud

HJ EDUCATES IN 08

 

[FlyFishDive]

HJ

So, the guy that gets the whole check doesn't have to really end up claiming the whole thing as income as long as he writes the 1099's for each of the amounts that he distributes to the rest of the crew. Is that right?

Can anyone write a 1099 to anyone else or do you have to be a business or something along those lines.

If you recieve a 1099, depending on the suffix (1099-int, 1099-div, etc...), you sometimes need to do a Schedule C (profit

 

[Musella]

Does it work like gambling, where if you win, you can then deduct the cost of the boat for the year to offset the income?

 

[FlyFishDive]

the rest of my post:

Depending on the 1099 that gets issued to you, you may need to do a schedule C and self employment tax. Is this 1099 one where you wouldn't have to do that?

 

[asiegel]

Musella: where in gambling do you deduct for winnings?

 

[Frigate]

FlyFishDive,

Alot of good information on how to split expenses and winnings. Excellent information from HungryJack on taxes.

However, over forty years I have seen alot of friendships ended and many PO'ed people because one thing was not done. That is:

Before the tournament starts the captain and/or owner of boat and the crew need to have a sit down to discuss expenses, and tournament winnings and calcutta money. Who pays what and who gets what. Everyone must be perfectly clear on this before the tournament starts.

 

[Musella]

asiegel wrote:
Musella: where in gambling do you deduct for winnings?

We get a win/loss statement at the end of every year from each of the atlantic city casinos we play at.. You can't deduct the losses, UNLESS you they also reported winnings to the IRS, in which case, you can deduct the losses from the year, as well as the expenses incurred, against the winnings.. up to the amount of the winnings

for example: You win a $10,000 jackpot that they report to the IRS.
You also lose $15,000 that year..
On your tax return, you add the $10,000 as income, but then subtract $10,000 in losses, so it winds up you pay no tax on that win. The remaining $5,000 in losses doesn't count. You can't deduct that from your regular income.

I wonder if you could do the same with boating expenses.. if you win a big tournament.

 

[FlyFishDive]

Frigate,

That is my philosophy as well, which is why I asked the question on how the moneys are handled if your lucky enough to place in the money.

Musella,

Yes, you can deduct expenses for the tourny. Either in your schedule A just like for gambling or on the schedule C if it ends up going down the business route.


I just happened to be picking up my taxes today and ran it by my accountant. From what I can decipher so far, as they were pretty busy. Basically there are 2 scenarios. I will get back in touch with the accountant after the tax season craziness is over

Scenario #1:
Each member gets a check from the tournament. Then you just claim it as other income on your 1040 and then you can also deduct expenses if you itemize on schedule A. Good thing is no schedule c or self employment tax. Bad thing is it is tough for each guy to get recipts for the deductions because typically one check goes to the tourney and other expenses, fuel, bait and so on.

Scenario #2:
One person gets a check, then has to dole it out to the others. This gets a little fishy (no pun intended) and essentially puts you in a business mode. Meaning 1099's schedule C's and self employment tax for everybody.

Hopefully someone can fill in the blanks with accurate info. I will definately be getting back with the accountant though.





This post edited by FlyFishDive 08:44 PM 03/29/2008