David kills Goliath in Michigan will keep promise to friends!

Reply #46

AuntiePat — Tue, 08 Apr 2008 13:08:54 GMT

oops--should have read further--saw that KyFloyd answered question way better than I could have.

Reply #45

AuntiePat — Tue, 08 Apr 2008 13:04:36 GMT

Actually in 2007 I believe the tax free exemption increased to $15,000 perperson so you could give you kid $15,000 and your spouse could give your kid $15,000 in the same year without incurring additional taxes. However--speaking with and estate planner--one who works on Performance Based Objectives and NOT just a flat fee--and a good tax lawyer prior to collecting the money from the lottery could have saved this guy and his friends LOTS of money.

Why not just keep your mouth shut and make th... [ More ]

Reply #44

JWBlue — Sat, 05 Apr 2008 01:09:17 GMT

When I win, I won't have any gift tax worries. Any gift of over $10,000 in one year is too rich for me.

Reply #43

KY Floyd — Fri, 04 Apr 2008 20:28:13 GMT

I originaly read rubberbandman's post as suggesting that you could avoid the reporting requirements through multiple transactions that are below the reporting threshold. Perhaps that's what Destined was thinking, too. Any intent to evade the reporting requirements is structuring, and therefore illegal, even if there's no intent to evade taxes. Of course tax evasion (or money laundering, which usually goes hand in hand with tax evasion) is the most likely reason for structuring.

Reply #42

KY Floyd — Fri, 04 Apr 2008 20:20:55 GMT

Uff Da and JustX are both right. Once you buy it, the ticket is yours and you can make gifts of shares as you see fit. The lottery may or may not write individual checks, but if you only get one you can distribute the shares with no problem. The problem you will encounter is based on the IRS' presumption that you made a gift(s) of money rather than a share(s) of the ticket. In your example, even if you have an affidavit, dated and notarized before the drawing, describing the gifts I wouldn't be... [ More ]

Reply #41

Uff Da! — Fri, 04 Apr 2008 14:51:47 GMT

People who have handled their finances conservatively all their lives, handled small inheritances in a manner to even things up among siblings, and rallied to the aid of those relatives who met with severe financial hardships are not apt to change their ways in their 60s, 70s and 80s. And the younger generation of my relatives includes one with a degree in finance, another who has studied law and recently took his bar exam. (Doesn't know yet if he passed.) I'm confident not only in their ability... [ More ]

Reply #40

Stack47 — Fri, 04 Apr 2008 13:27:16 GMT

I'd be happy if I won the $400 you did, but I think that's a little different than $135 million.

The only difference is the clerk handed me the cash and the state lottery will write him a check and when it's all said and done, it will be our money to spend, save, invest or blow as we please. I understand that if I blow my winnings that I won't be a news item or the subject in the next lottery TV show.

It will be a few weeks before the Powerball and Mega Millions jackpots get high enough f... [ More ]

Reply #39

Stack47 — Fri, 04 Apr 2008 12:16:33 GMT

You should know full well by this point what taking the proper steps in claiming a win that big typically means.

The proper steps are printed on the back of the ticket, if the print is too small, it's on the website, or you can call the lottery office. The retailer validated and cashed my $400 winner. When I won $5000, the retailer gave me a pay to bearer ticket that I took to a local bank and it was my choice of a check, cash, or both. If you have a claim over $5000 you must contact a regio... [ More ]

Reply #38

justxploring — Fri, 04 Apr 2008 06:01:29 GMT

Oops - ran out of time. Uff Da, I just want to say that's a great plan. I hope you get to use it some day. I also wish I had the trust confidence in my relatives like you do

Reply #37

justxploring — Fri, 04 Apr 2008 05:39:43 GMT

Congrats to you, Stack! I'd be happy if I won the $400 you did, but I think that's a little different than $135 million.

Regarding the $12,000, Destined, I am not sure you are correct. I don't think it's tax evasion. However, I do agree that $9,999 would draw too much attention, since banks need to report deposits of $10,000 or more. If you work in retail and someone walks in with $10,000 cash you are supposed to report it. That's actually to control money laundering, but I suppose that... [ More ]

Reply #36

JackpotWanna — Fri, 04 Apr 2008 05:10:38 GMT

So true.....

Reply #35

JackpotWanna — Fri, 04 Apr 2008 05:01:39 GMT

I rather be in his shoes too.

Reply #34

Uff Da! — Fri, 04 Apr 2008 03:33:22 GMT

According to my reading on the web I believe a proportional lottery pool would be acceptable to the IRS, but the burden of proof that such an agreement existed prior to the drawing is going to be on the winners. I've read some reports of cases on the web, and my conclusion is that if a person doesn't want a lot of money going out in legal fees fighting the IRS (and still likely losing), one had better make the evidence as clearcut as possible. I don't believe the way you (Destined) have suggeste... [ More ]

Reply #33

DC81 — Fri, 04 Apr 2008 03:29:30 GMT

That's all I'm saying, he's asking for trouble, he better hope certain relationships don't go bad or he's really going to be up a creek. Though at least some of the things he said in the story, such as going back to school, is certainly a good idea. Of course how many other winners have said that? Getting LASEK isn't a bad thing either, though I dunno if announcing that you plan on buying a cottage on Mullett Lake along with a boat or two (why would one need two boats, if on the same lake, maybe... [ More ]

Reply #32

Steven948 — Fri, 04 Apr 2008 03:20:31 GMT

once you give friends any money that they wont have to pay back, you're not friends anymore. I can see this winner going broke in 2-3 years, 5 years the most. Why be in a hurry to claim such a life changing amount of money? If i was him Id wait at least a month (financial advice, etc..) to claim my winnings.

Reply #31

Coin Toss — Fri, 04 Apr 2008 03:09:54 GMT

Justxploring

Coin Toss, the recipient of a gift never has to pay gift tax unlessother arrangements had been made. The burden is on the giver. So ifhe gives a friend a million dollars, that friend doesn't have anyobligation to pay the tax AFAIK.

BTW, to the best of my knowledge, there would be no gift tax on amillion dollars. You can give away up to $1 million in your lifetime.

Isn't giving a million each to several people after hitting a jackpot quite a bit different than giving away... [ More ]

Reply #30

DC81 — Fri, 04 Apr 2008 02:58:13 GMT

Yes because winning $400 is exactly the same as winning millions. Where did I say anything about a book? Is my using quotations marks that make you think that? You should know full well by this point what taking the proper steps in claiming a win that big typically means. This guy has completely thrown himself out there and opened his mouth about how he's going to be giving friends a million dollars each. Then again, maybe you're just one of those who buy into the idea of thinking it necessary t... [ More ]

Reply #29

Destined — Fri, 04 Apr 2008 02:22:21 GMT

Unless its done in cash, any legit bank would report 1,000 deposits of $9,999 to the IRS. Its called structuring and its illegal tax evision. To avoid taxes legally and in full, if hes married they as a couple can give an individual up to $24,000 a year tax free on both ends, and if that person is married it could total $48,000 a year. It would take at least 20 years to pay back tax free though, and the guy could go broke in that time.

Im not a big fan of the gift tax. Its a form of double t... [ More ]

Reply #28

GASMETERGUY — Fri, 04 Apr 2008 01:12:40 GMT

I see lawyers lining up. I see people who know the winner, knew the winner or thought they saw the winner walking down the street negoiating with these lawyers. I see many, many friends wanting their one million. I see lawsuits being filed. I see many, many relatives coming out of the woodwork with He promised me a share on their lips.

I see trouble in River City.

Reply #27

fbird — Fri, 04 Apr 2008 01:04:37 GMT

agree with you s47....there is, really no proper way ...what ever works best for ones self. give it all away or keep it all, or anything in between...after all it is their money and what they want to do with it is their business, regardless of what others may think. But in the end we all wish they do whats best for them, that they have a wonderful life, free of worries and BILLS ...LOL !!!!!

let us all dream, that we may have the dreams and freedom to choose that David has.............

Reply #26

Stack47 — Fri, 04 Apr 2008 00:59:55 GMT

I'd be a happy camper if somebody gave me $1 million even if I had to pay taxes on it.

Reply #25

Stack47 — Fri, 04 Apr 2008 00:51:38 GMT

About two hours ago I cashed a ticket for $400 without reading the proper steps book. I suppose I could have waited until tomorrow, next week, or next month, but it just seemed more logical to have the $400 in my pocket than misplacing the ticket. And since my life wasn't ruined the last time I cashed a ticket, I have no reason to believe that will happen this time.

If there is an actual proper steps book that prevents lottery winners from ruining their lives, it applies to what they do after... [ More ]

Reply #24

fbird — Thu, 03 Apr 2008 23:52:11 GMT

oh absolutely...this guy never thought it out at all ..if he gives them the 1 mill someone is going to be paying taxes big time ! but ,that being said it is his money to do whatever he so pleases to do. Me, if i was ever so fortunate, would sign on family and freinds for a portion of the pot and call it a day. things can be changed, with a good lawyer. Look at the lady who won and her identity is kept secret. well with the mega millions you are suppose to be known to other winners, but she and a... [ More ]

Reply #23

RJOh — Thu, 03 Apr 2008 23:48:32 GMT

Some states do allow a group to fill out a form with the SSN of everyone in the group and their share of the jackpot and will send a W-G to each for tax purpose if the amount of the jackpot is over a certain amount.

This guy should have checked with a lawyer before announcing his intentions publicly. Some of his other friends and relatives that he doesn't plan to give anything may be disappointed. I would have kept my intentions between me and the friends I planned to share it with.

Reply #22

justxploring — Thu, 03 Apr 2008 23:29:04 GMT

Okay. It was the way you stated it. I just don't see the lottery doing this. I can see a lawyer creating an agreement that will take care of the distribution of money, but not the way you stated. I'm not a lawyer, but I know of no cases in FL where that has happened. If you say you know they do, so be it. No argument from me. If I were a lottery expert, I'd be very rich!

Edit: I still think the IRS would question the arrangement if it was a last minute thought. The news article we are talkin... [ More ]

Reply #21

fbird — Thu, 03 Apr 2008 23:14:56 GMT

this would not ge a gift...they are part owners....a good lawyer would help with all the details...has happened before.......

Reply #20

Piaceri — Thu, 03 Apr 2008 23:14:11 GMT

From what I understand, Michigan will take it's 4.35% right away.

According to the Michigan lottery website, the total jackpot was $136 million, and the lump sum payment that he took was $84,367,246 before taxes. Less withholding, his net check is about $59.6 million. The of course, Uncle Sam will want you to give him more.

I could do $59.6. Plenty to give a few friends a cool mil, and pay gift taxes. Not that giving to friends is in my plans, but hey, whatever toots his horn. I'm happy f... [ More ]

Reply #19

justxploring — Thu, 03 Apr 2008 23:12:00 GMT

fbird, many lotteries won't pay more than one winner. For example, in Florida they will only write one check to the ticket holder.

The IRS also won't let you get away with a last minute gift like that. The ticket itself is worth just one dollar, so you can give the ticket away, just not the money! You need to show that you already had an agreement or it's a gift.

The lottery doesn't divvy up portions of the jackpot. It's not their job. You can, however, gift the ticket to your friend and... [ More ]

Reply #18

fbird — Thu, 03 Apr 2008 23:07:56 GMT

the only way around the tax issue, is really pretty simple. lets say the after tax amount ( all taxes ) is 55 mill. you want to give who ever, 1 mill ...then you sign them on the winning ticket for a 1.9% share and the taxes are all paid for you and them....and as you are at the lottery office you mention to these folks, that this is a one time deal

Reply #17

justxploring — Thu, 03 Apr 2008 22:51:01 GMT

Coin Toss, the recipient of a gift never has to pay gift tax unless other arrangements had been made. The burden is on the giver. So if he gives a friend a million dollars, that friend doesn't have any obligation to pay the tax AFAIK.

BTW, to the best of my knowledge, there would be no gift tax on a million dollars. You can give away up to $1 million in your lifetime.

There's also a misconception about the $12,000. There is a form that has to be filed if the gift is more than $12,000 to a... [ More ]

Reply #16

justxploring — Thu, 03 Apr 2008 22:49:00 GMT

Rubberbandman writes: You are correct, and that is why I said 9999, because it is LESS than the limit..

Sorry, it sounded to me as if you wrote $9,999 because you thought the gift had to be under $10,000. Otherwise it didn't make sense. Doesn't matter.

Anyway, once again you are wrong.

You write: the exemptions you are talking about only relates to familial and personal problems, not giving money to your best friends

You can give $12,000 to anyone. Your personal relationship has no... [ More ]

Reply #15

Coin Toss — Thu, 03 Apr 2008 22:31:25 GMT

I'm not sure what the tax would be on giving someone or several people a million dollars, but Uncle Sam and the state are going to get theirs, and someone is going to pay it.

Human nature tells us that if you were to win a jackpot and had promised to give someone a million, they would say, Would you mind paying the taxes on that for me, too?

(In other words, can you make it one million net, taxes paid

Reply #14

psykomo — Thu, 03 Apr 2008 22:21:33 GMT

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IF you have any problem's managing D money.....

Just CONTACT .........a member of the Lottery Post or Todd...as HE is

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PSYKOMO

Reply #13

DC81 — Thu, 03 Apr 2008 21:25:29 GMT

He's publicly come forward without taking the proper steps , so I expect to see a lottery ruined my life story within a few years. Good heart or not, he made a foolish decision and I won't feel sorry for him if things go bad. Not to mention the effects it might have on those friends and friendships.

Reply #12

JackpotWanna — Thu, 03 Apr 2008 21:23:15 GMT

My point is that he is much richer than last week. He agreed to keep his promise to his buddies. With the interest he earns from the bank(low risk investmests) could pay his buddies $50,000 a year without a problem.

Reply #11

Uff Da! — Thu, 03 Apr 2008 20:23:10 GMT

No, he is not 135 million richer than a week ago. The 135 million was the advertised jackpot, spread over 26 years. According to one news article, if he chooses the cash option, which most people do, that will be $84.1 million, or $62.7 million after taxes. But even that is inaccurate. The $62.7 million is after withholding, not after his actual taxes. His actual amount after federal taxes will likely be less than $55 million. I don't know what his state taxes would be, but no doubt the state wo... [ More ]

Reply #10

JackpotWanna — Thu, 03 Apr 2008 20:01:55 GMT

Who are we to judge? Sounds like the winner has a good heart. He is 135 million richer than a week ago. If I was him I would ask them to sign a contract with a lawyer present for no additional request. Also I would not give the $1 million all at once. Most likely would spend it in blink of eye. Maybe $50,000 a year in contract is good. They may hate him for this but long-term it is good for all parties.

Reply #9

rubberbandman — Thu, 03 Apr 2008 18:40:53 GMT

Gift tax exemptions

There are two levels of exemption from the gift tax. First, transfers of up to (as of 2006) $12,000 per person per year are not subject to the tax. An individual can make gifts up to this amount to as many people as they wish each year. A married couple can pool their individual gift exemptions to make gifts worth up to $24,000 per recipient per year without incurring any gift tax. Second, there is a credit that essentially negates the tax on gifts until a total of $1,000,... [ More ]

Reply #8

justxploring — Thu, 03 Apr 2008 18:11:32 GMT

Gift taxes are an interesting subject matter; why don't people just give $9,999 multiple times and just avoid the tax,

Where did you get that number? First of all, the annual exemption is $12,000 per recipient. Second, you can give much more than that but then skip years as long as the total doesn't exceed $1 million while you are living. You can also give additional exempt gifts such as college education, medical bills pay for health insurance insurance premiums. If someone is mar... [ More ]

Reply #7

hearsetrax — Thu, 03 Apr 2008 18:11:22 GMT

giving away free money is a very ridiculous concept

how many of us have made the few silly promises

Reply #6

ThatScaryChick — Thu, 03 Apr 2008 17:59:28 GMT

I think it's his money and if he doesn't mind paying the taxes that goes along with giving that much money away, then good for him.

Reply #5

rubberbandman — Thu, 03 Apr 2008 17:30:33 GMT

That's why you shouldn't give away money in the first place, and if you do you should give in small quantities.

Givin away money, you got to be kidding me, that's the most ridiculous concept that I have ever heard of.

Reply #4

Coin Toss — Thu, 03 Apr 2008 17:11:51 GMT

On one of the lotterey doucmentaries a jackpot winner was asked about giving money to other people and he said he had given several people a million dollars each - and bar none, every single one of them came back asking for more.

Reply #3

rubberbandman — Thu, 03 Apr 2008 17:09:21 GMT

With 135 million dollars, I think that this person will handle 35-45% gift taxes.

Gift taxes are an interesting subject matter; why don't people just give $9,999 multiple times and just avoid the tax, what is somebody going to do with a million dollars immediately anyway that is so important, unless it's some kind of medical emergency, and even then you can make systematic payments

Reply #2

justxploring — Thu, 03 Apr 2008 16:47:04 GMT

Uff Da -

(A) Maybe he should just wait and jump off a tall building in 2010. If he's married, he might want to transfer some of his money to his wife. Then I believe they can both give away $1 million. I think there has to be some way around it. But I agree with you that most people don't think about the 45% they'll have to pay in gift tax over the exemption. It's supposed to drop to 35%, but who knows what the government will do year after year? That said, you can't take it with you, and he... [ More ]

Reply #1

Uff Da! — Thu, 03 Apr 2008 14:25:21 GMT

What do I think? That he will probably be very surprised when he learns what his gift taxes will be.

If he made the promise with knowledge about the tax implications, then I see no problem. He has enough money to do it. But if he was unaware, he might have done things differently.

David kills Goliath in Michigan will keep promise to friends!

bigato1010 — Thu, 03 Apr 2008 13:50:23 GMT

Today was my day off i was watching the news cast fox 2 channel and i got the chance to see the newest megamillion winner name David. He is a 60yr old man from Livonia who purchased his ticket in Redford township. According to him, he has four friends that he made promised that if he wins the megamillion, each will recieve 1million. David Congratulation to you i think you have a good heart . What do you think