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Say you win, and you clear $50 million. I would want to give my immediate family (parents, brother, sisters) each a few million, but I don't know how it would be possible to do so without being taxed a second time on the money (taxed first when collecting the winnings, then a second time because it is income to them).
It's not income to them, it's a gift. Gifts are not income, but they are subject to gift tax, which is actually assessed against the donor (giver). Gifts in excess of the annual exclusion, currently, $11,000, are taxable. Taxable gifts are applied against the lifetime exemption amount of $1 million (smaller than the estate tax exemption amount, currently), before you actually PAY a gift tax.

As for the charitable angle, remember, you have a contribution limit of 50% of AGI, subject to a 5 year carryover.

And you're right about the withholding, but so what? If you have enough charitable contributions, or whatever type of deductions, it just lowers your taxable income, and you get a refund, just like withholding from wages. (Though you ought to consider applying some or all to the next year's estimated taxes, too.)


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