Hole In One Prize Splitting

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, Foresite Sports 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.