Legion - Raffle - W2G

[Hoosier]

Client is a 501 non-profit American Legion with a raffle (gaming) license. Organization conducts a drawing on 12/29/17 with a $40,000 winner. According to IRS Notice 1340, the Legion should withhold 28% for federal withholding. The actual check has not yet been prepared. The question is whether or not the check should be dated in 2017 or 2018. The drawing was in 2017 but the check will not be presented until 2018. The answer will affect the W2G date and the check date. Any suggestions?

[New York Enrolled Agent]

Client is a 501 non-profit American Legion with a raffle (gaming) license. Organization conducts a drawing on 12/29/17 with a $40,000 winner. ... Any suggestions?

Did the winner have the ability to get the money on or before 12/31/2017?

Crucial question to determine if there was constructive receipt.

[kathyc2]

If would be determined if constructive receipt occurred in 2017. https://www.law.cornell.edu/cfr/text/26/1.451-2

[Hoosier]

Raffle

Legion made decision before the drawing to issue the check the first week of January 2018.

[taxea]

Legion made decision before the drawing to issue the check the first week of January 2018.

Was that decision known to the winner before the raffle? If they decided before the raffle to withhold the winnings then constructive receipt would not be 2017.