They call their partnership "Lucky 13," which stands for 13 Internal Revenue Service employes who buy and scratch their D.C. Lottery tickets together on their lunch hour.

The partnership, supported by all the necessary legal paperwork and formally registered with the IRS, has only one objective: hitting the $1 million jackpot in the D.C. Lottery.

Yesterday, "Lucky 13" took a giant step toward that goal as its single entry was selected as one of the 20 finalists now eligible to win $1 million in a grand prize drawing next week.

"We just went around the office and asked and it just came out to 13 people," said Damon Nicholas, who like the others works in the IRS's data services division. "Thirteen is usually an unlucky number. We decided we were going to make it lucky."

"Lucky 13" and the 19 other finalists were plucked out of a plexiglass drum from among the 3,448 lottery players who had won $100 prizes in the lottery's third game, Loose Change, which was completed early last month. Only $100 winners were eligible for the $1 million prize.

Of the 20 selected at yesterday's preliminary drawing before a lunchtime crowd in front of the District Building, all were individuals except for "Lucky 13's" ticket.

Lottery officials said it was the first time since the lottery began operating last year that a group entry had made it into the finals.

Gloria Decker, general manager of Games Production Inc., which operates the city's instant lottery game, said group purchases are common in lotteries across the country and are encouraged because they usually increase sales.

Under the D.C. lottery board's rules, only one person or a legal entity, such as a partnership or a corporation, can be the legal ticket holder.

If two or more persons agree informally to share part of a ticket, the lottery board will issue the prize money only to that person whose name is written on the ticket, and it will not divide the money among the various partners, according to Jeanette Michael, the board's attorney. She said in such cases it would be up to the individual partners to divide up the money.

Nicholas, 26, one of "Lucky 13's" organizers, said he and the others realized that there also were tax advantages to forming a partnership rather than submitting their entry under one person's name.

Regardless of any agreements the 13 had for splitting the money, Nicholas said, if the prize were awarded to one of them, then that person would be taxed at a very high tax rate on the full $1 million. An IRS spokesman confirmed that the winning person would be taxed for the full $1 million even if he or she split it with others.

However, under a partnership, the money flows to the partnership and each member of the partnership is simply taxed on the amount he or she receives, which the group calculates at about $3,800 per person a year for 20 years. The $1 million is awarded at the rate of $50,000 a year for 20 years.

Nicholas said "Lucky 13," accumulated more than 500 tickets, but won only one $100 ticket, and that happened during the first week.

One group member bought 26 tickets each week ($2 per member) between March 16 and June 7, the last day of the game. They met over lunch, divided them up and scratched them.

"I never bought a lottery ticket or anything," said Cheryl Randall, 32. "I was sort of swept along with the other members of the group."

"Lucky 13" now will compete with the other finalists in the grand prize drawing, which will be held at the Convention Center next Monday at 9 p.m.

Sixteen of the finalists will win $1,000, and there will be separate prizes of $100,000, $25,000, and $10,000 in addition to the $1 million grand prize.

The other finalists were:

Hazel Blade, Washington; James H. Brown, Alexandria; Earl Burgess, Washington; Kim E. Davenport, Arlington; Hoai Thuc Hong, Bethesda; Tanner B. McMahon, Washington; John A. McNamara, Washington; William Mabry, Washington; Theodore I. Mayer, Bethesda; Dayton Michael, Berkeley Springs, W.Va.; Erlene Noble, College Park; Susan G. Riley, Washington; Algia Small, Washington; Doris E. Spann, Washington; James Thomas, Lanham; Frank A. Ucman, Alexandria; Alice Ward, Washington; Robert M. Williams, Washington; and Mary Wilson, Washington. CAPTION: Picture 1, A crowd stood in the hot noonday sun yesterday outside the district Building, each hoping to be selected as finalists in the $1 million drawing. Picture 2, Six of the Internal Revenue Service employees calling themselves the "Lucky 13" chat after their group was picked for the $1 million lottery drawing. Picture 3, Frank Smith, Ward 1 councilman, picks the first five of the $1 million lottery finalists. Photos by Douglas Chevalier--The Washington Post