Split Cash Prize: Win/Win Situation?

Friday, September 15, 2017

Sharing is caring, right? Instead of offering just a cash prize, why not make it a cash split? One of the most popular options for charity golf events is a $10,000 Cash Split where $5,000 is awarded to the golfer making the hole-in-one and $5,000 is donated to the charity, organization or scholarship fund. This sounds like a win/win situation, but is it?

It seems like a simple enough proposition: host a hole in one contest at your upcoming golf outing, and should a golfer successfully hit a hole in one, have half of the prize money go to the golfer, and half the prize money go to a charitable foundation. However, unfortunately, most hole in one insurance packages do not allow for this type of prize-splitting. The reason lies in the tax implications of winning a hole in one prize. Just as you are responsible for paying taxes if your happen to win the lottery, you also must pay Uncle Sam if you take home a hole in one prize of any value. This simple rule severely limits the potential for prize-splitting because no matter what the circumstances, if a lucky golfer makes a hole in one and accepts the accompanying prize, he or she is responsible for the full tax burden. If they were to immediately donate half of that to charity per the prize-splitting agreement, they would still have to pay tax on the half they gave away. Because of this important distinction, many hole in one insurance providers will not permit prize-splitting in their agreements.

One potential solution to the prize-splitting issue that we have heard various tournaments use in the past is to make golfers sign waivers before participating in hole in one contests that stipulate should they win, they agree to donate half their winnings to charity. Though a bit unwieldy and difficult to do out on the golf course, this is a possible alternative to investigate further if you are interested in prize-splitting. Of course as with any legal questions, US Hole In One strongly recommends consulting with your legal counsel before attempting to enforce a prize-splitting arrangement. Should you have any further questions regarding the terms and conditions governing hole in one insurance agreements, do not hesitate to call us up and let us know.

Start by giving us a call (888-882-5440). Most of our customers find it extremely helpful to talk to us and ask questions about setting up the contest. By the end of our conversation, there will be no split decision. You will have an exact price quote and an application for your contest.

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