Tax Notice for Winning Balls Sweepstakes

Effective Date: September 20, 2025

This Tax Notice provides general information on tax implications for prizes in the Winning Balls Sweepstakes ("Sweepstakes"). The Sweepstakes is a promotional activity, not a lottery or gambling activity. All prizes are paid in Solana coin ($SOL) from the dedicated Payout Wallet (D6i6hFAwbCS8hE7KESoZrPdUNRrfXfXCPxykZvt75dEr). This is not tax advice—consult a qualified tax professional for your specific situation.

Winner Tax Obligations

Prizes are taxable as ordinary income at their fair market value (FMV) on the date of receipt.
Winners are responsible for reporting prizes on their tax returns and paying all federal, state, local, and international taxes.
For U.S. residents, report prizes as "other income" on Form 1040, Schedule 1.
Non-U.S. winners may have additional tax obligations in their country of residence.

Withholding and Reporting by Sponsor

Due to anonymity (wallet addresses only), Sponsor withholds 24% federal backup withholding on all prizes $600 or greater and reports to the IRS via Form W-2G (using wallet address as ID; "unknown recipient" for name/TIN). No forms are issued to winners.
For prizes under $600, no withholding or reporting from Sponsor, but winners must self-report.
Withheld amounts are sent to a dedicated Withheld Tax Wallet (3yK7H4MwfcbqZLTyhjE3DmC1sY9Nw6JeiDqwi29CuSjM) converted to $USD on a centralized exchange, and remitted to the IRS via EFTPS.
For potential non-U.S. winners, Sponsor defaults to 24% withholding (as residency is unknown); winners may reclaim any over-withholding via their tax return or treaty claims with the IRS.

Example

Prize: $1,000 (e.g., 100% net pool win).
Withholding: 24% ($240) if $600+.
Net Payout: $760.
Winner reports full $1,000 as income; credits $240 toward their taxes.