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Comment by tzs | Hacker News Reader

I wonder if anyone is keeping a list of all the times this has happened?

I know that its not something new, because 30 years ago when I was in law school one of the cases studied in my class on transnational taxation was that of an Australian group (if I'm remembering the right country...) that tried to buy every possible ticket in a US lottery.

My recollection is that they only ended up getting something like 90% of the possible numbers but that was enough to get the top prizes and questions arose on how that should be taxed and whether the cost of the tickets was deductible.

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You're thinking of Stefan Mandel's International Lotto Fund[0]. They tried to buy every ticket in the Virginia state lottery in 1992. They won the money, but IIRC there were years of litigation.

[0] http://investpost.org/mutual-funds/group-invests-5-million-t...

> questions arose on how that should be taxed and whether the cost of the tickets was deductible

What were the questions? What would the case be that cost of tickets shouldn't be deductible?

As I said I was going from memory from a class 30 years ago.

Looking at the case again, I see that the dispute was on whether tax should be withheld in the US. The tax treaty between the US and Australia said that the US would not tax the winnings. The winners had filed the appropriate form with the IRS to invoke the treaty and be exempt from tax.

The state lottery commission automatically withholds federal and state taxes, and refused to make an exception for the Australians. The Australians sued and a district court issued an injunction to stop the state from withholding those taxes.

The federal and state governments appealed. The appellate court reversed and removed the injunction. It turns out there is a law that prohibits courts from issuing injunctions to stop tax collection (and withholding counts as collection) so the district court overstepped its jurisdiction. What you are supposed to do if you think a tax is improperly applied is pay it and then seek a refund.

In many countries, gambling winnings are not taxed. I'm guessing the argument was that this wasn't really gambling.

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