In the Dickerson case, T.C. Memo 2012-60, the taxpayer established an S corporation shortly after winning the lottery. The taxpayer and her family were the shareholders of the corporation. The taxpayer then transferred the lottery ticket to the S corporation, which ultimately claimed the lottery prize. The IRS determined that the taxpayer made a gift as a result of the transfer to the S corporation and issued a deficiency notice for $771,000 for gift tax owed.
The court evaluated the facts of the case and found that the taxpayer had no family contract which required the taxpayer to transfer the ticket. The court also found that there were no predetermined sharing percentages or voting rights, and there was no pooling of money of the family members for the purchase of lottery tickets. The court concluded that the transfer to the S corporation was a gift because the taxpayer transferred property to a corporation for less than adequate consideration.