Lottery Winner Tonda Lynn Dickerson

Lottery Winner Tonda Lynn DickersonFor those working in customer service, it is always nice to encounter customers who treat employees with care and respect. Customers who tip are even better, especially when they tip in the form of winning lottery tickets. When Edward Seward walked into a Waffle House in Green Bay, Alabama, Tonda Lynn Dickerson had no idea that he would be gifting her with a winning lottery ticket—nor did she know the trouble that would follow.

The Gifted Win

On March 6, 1999, regular Waffle House customer Edward Seward gifted five employees with Florida Lotto tickets. It was a nice sentiment, but with the low likelihood of actually winning the lottery, none of the employees expected to hit the jackpot. Luckily for Grand Bay, Alabama, resident Tonda Lynn Dickerson, her gifted envelope held a lottery ticket worth $10 million (or $5 million as a lump sum). The winner accepted the latter the very next day.

As expected, Dickerson, her co-workers, and Seward were all very excited—after all, they were all certain they’d get their share of the winnings. Unfortunately, the Tonda had different plans in mind. Despite the group’s verbal agreement to share the winnings, Dickerson intended to keep the money for herself.

Sued for Winnings

The Waffle House employees weren’t going to forgive Dickerson’s betrayal so easily. Since the original deal was to split the winnings with her co-workers, the group took action by suing the winner. Naturally, the general public sided with the suing party, but unfortunately the law didn’t. Though the court acknowledged the verbal agreement, Alabama law forbids gambling contracts of any kind. As a result, Tonda Lynn Dickerson won in court and kept the entirety of her winnings.

While her former co-workers may have lost in court, Dickerson’s time there wasn’t quite over. Edward Seward was just as angry as her former co-workers, as he’d been promised a pick-up truck if any of the employees held a true winning ticket—after all, he was the one who gifted them. Likewise, the tickets were awarded under the condition that any winnings be split among the group.

In an attempt to take Dickerson back to court, Seward argued that Dickerson’s actions bordered fraudulence. Though his case lost before making it to court, Seward continued to appeal it until the case reached the Supreme Court of Alabama, where he lost again.

What Did Tonda Lynn Dickerson Do With Her Winnings?

After facing legal hassles, Tonda Lynn Dickerson’s focus shifted to making a plan for her money. Though most lottery winners spend their winnings on new houses and cars, Dickerson wanted to preserve her newfound wealth as long as possible.

She and her family worked together to come up with an investment plan, leading her to form an S corporation named “9 Mill,” where she could store her winnings. Many wealthy people in the USA take this approach, as an S corporation abides by IRS requirements, comes with no income taxes, and protects assets. For Dickerson and her family, it seemed like a great opportunity. Unfortunately, the winner didn’t examine the tax laws closely enough.

Back in Court

Tonda Lynn Dickerson in Tax CourtThirteen years after Dickerson’s big win, an IRS attorney reviewed the details of her corporation. Because Dickerson gifted 51% ($2,412,388) of “9 Mill” to her family members, the IRS found that she was responsible for paying a hefty gift tax of over $770,000. Dickerson was insistent that she wasn’t responsible for paying the amount, which landed her back in court.

When Dickerson challenged the IRS, her claim was that the gift tax couldn’t be valid because she and her family had a verbal agreement that she’d share lottery winnings with them before she even won the lottery. She argued that the split of the money was not intended to be a gift, but rather compliance with a contractual agreement (though she’d never created an official contract). Likewise, she insisted that the “9 Mill” Corporation owned the winning ticket and that her family members were merely shareholders.

While Dickerson may have had luck her first time in court, she wouldn’t be so lucky the second time around. The Tax Court ruled against her, reiterating that it was a gift and that any contract would not be considered valid under state law—which was ironic, considering this is how she won her first case against her former co-workers and Edward Seward. Still, the Tax Court agreed that the gift value should be discounted when taxed, as its value had decreased over time. Its amount was reduced from the original $2,412,388 to $1,119,347.

When all was said and done, Dickerson had no choice but to pay a large gift tax, which proved to be the universe’s karmic relief for her betrayal of her co-workers and the customer who gifted her the winning ticket. Although no sources state how much she ended up paying, we figure that based on the reduced value of the gift it was likely about $357,000.

Where Is Tonda Lynn Dickerson Now?

Unexpectedly, Tonda Lynn Dickerson has flown under the radar since her loss in court. Whether or not that’s a good thing it’s hard to say, but generally no news is better than headline-making news.

Conclusion

If Tonda Lynn Dickerson’s big win teaches us anything, it is that it is important to do your research before cashing in your winnings. After all, you never know what troubles you’ll face when newfound wealth fills your pockets. It could be anything from angry co-workers rightfully asking for their promised share of your winnings to the IRS sending you a letter demanding you pay a massive gift tax.

Regardless of what troubles could abound, taking home millions in lottery winnings is pure luck. Dickerson’s case proves that it is important to be responsibly—and kindly—lucky.


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