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What is wrong with this picture ?

Topic closed. 11 replies. Last post 9 years ago by Guru101.

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guesser's avatar - Lottery-017.jpg

United States
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June 16, 2006
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Posted: June 12, 2007, 9:27 pm - IP Logged

'A Florida financial-services firm employee and a Henrico County dental-clinic worker came forward Monday to claim a $44 million Mega Millions lottery jackpot.

Dan Franks, who lives in the Tampa Bay, Fla., area, and Kimberly Swanson chose to take a lump sum payment of $25.3 million rather than annual payments of $1.69 million for 26 years. After taxes, each will pocket about $7 million.'

 

Yeah, I know, we have discussed this ad nauseum, and I also know folks will pipe up and say '7 mill is better than zero - I'd take it', but still, after taxes, they get just 31.8% of the actual 'jackpot'.

It's the Gov't that hits the jackpot.. with 68.2% of the money.

I have not quite figured out where they came up with 1.69 mill x 26, because that adds up to 43.94 mill.  Gee, why don't they specify what THAT amount would actually be after taxes ? 

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    California
    United States
    Member #46824
    October 1, 2006
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    Posted: June 12, 2007, 9:39 pm - IP Logged

    guesser...the govenment doesn't get 68.2% of the money.  Remember they have to pay off the lower prizes also.

      Guru101's avatar - rw6jhh
      Indiana
      United States
      Member #48725
      January 7, 2007
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      Posted: June 12, 2007, 11:40 pm - IP Logged

      No, the jackpot IS $44 million. You have the option of taking THAT prize amount annually over 26 years, or you can take a present day value. Both options are taxed. You ARE getting what you won and there's nothing to complain about. Lottery jackpots are advertised as ANNUAL payouts.

      Gonna win.Big Smile

        fja's avatar - gnome1

        United States
        Member #91
        January 19, 2002
        11936 Posts
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        Posted: June 13, 2007, 12:06 am - IP Logged

         have not quite figured out where they came up with 1.69 mill x 26, because that adds up to 43.94 mill.  Gee, why don't they specify what THAT amount would actually be after taxes ? 

         

        Actual its 1.6923079 X 26 years, they just rounded off...taxes would be approx. 35-38% per year.  If the lump sum is a 50% payoff (22 mil) and you took 36% taxes from that, it would leave about 14 mill between the 2 ppl. 64% of the pot.

        "Everybody has to believe in something...I believe I'll have another beer!"   = W.C.Fields                      

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          NY
          United States
          Member #23835
          October 16, 2005
          3475 Posts
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          Posted: June 14, 2007, 12:41 am - IP Logged

          No, the jackpot IS $44 million. You have the option of taking THAT prize amount annually over 26 years, or you can take a present day value. Both options are taxed. You ARE getting what you won and there's nothing to complain about. Lottery jackpots are advertised as ANNUAL payouts.

          If they won't give it to you now, then it isn't what the jackpot is. If you have to wait for it, then it's a potential future value of the real jackpot.

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            Kentucky
            United States
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            February 14, 2006
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            Posted: June 14, 2007, 8:10 am - IP Logged

            'A Florida financial-services firm employee and a Henrico County dental-clinic worker came forward Monday to claim a $44 million Mega Millions lottery jackpot.

            Dan Franks, who lives in the Tampa Bay, Fla., area, and Kimberly Swanson chose to take a lump sum payment of $25.3 million rather than annual payments of $1.69 million for 26 years. After taxes, each will pocket about $7 million.'

             

            Yeah, I know, we have discussed this ad nauseum, and I also know folks will pipe up and say '7 mill is better than zero - I'd take it', but still, after taxes, they get just 31.8% of the actual 'jackpot'.

            It's the Gov't that hits the jackpot.. with 68.2% of the money.

            I have not quite figured out where they came up with 1.69 mill x 26, because that adds up to 43.94 mill.  Gee, why don't they specify what THAT amount would actually be after taxes ? 

            $25.3 million is the current price for purchasing a $44 million 26 year annuity. The lottery commission gives jackpot winners the option of purchasing an annuity for them or a one time payoff of the cost.

            "Yeah, I know, we have discussed this ad nauseum, and I also know folks will pipe up and say '7 mill is better than zero - I'd take it', but still, after taxes, they get just 31.8% of the actual 'jackpot'."

            This pre-tax jackpot of $25.3 million was split by two people (After taxes, each will pocket about $7 million.') and losing 55.3% off the top is still a kick in the butt, but each of them are done paying taxes on their $12.65 million. If they take the annuity option of $845,000, they have to pay taxes on that for the next 26 years and who knows what the tax rate will be in that period of time. Because there are so many factors involved it's difficult to determine which option, pay me know or pay me later is better.

              Guru101's avatar - rw6jhh
              Indiana
              United States
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              January 7, 2007
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              Posted: June 14, 2007, 2:24 pm - IP Logged

              If they won't give it to you now, then it isn't what the jackpot is. If you have to wait for it, then it's a potential future value of the real jackpot.

              The jackpot is what it is. The reason you're saying it's not, is because you think that all jackpots are in terms of actual present day cash value. That's not what a jackpot is. A jackpot is a TYPE of prize, and there are TERMS that go along with that prize. $44 Million over 26 years is EXACTLY what the jackpot was here. They took the cash OPTION. See, this is where most people think you're not getting what you  really won, but you did. The cash option is exactly that, an OPTION. Just because the majority of jackpot winners take the cash option, you can't say that this jackpot wasn't a $44 Million jackpot.

              Gonna win.Big Smile

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                NY
                United States
                Member #23835
                October 16, 2005
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                Posted: June 14, 2007, 11:04 pm - IP Logged

                The jackpot is what it is. The reason you're saying it's not, is because you think that all jackpots are in terms of actual present day cash value. That's not what a jackpot is. A jackpot is a TYPE of prize, and there are TERMS that go along with that prize. $44 Million over 26 years is EXACTLY what the jackpot was here. They took the cash OPTION. See, this is where most people think you're not getting what you  really won, but you did. The cash option is exactly that, an OPTION. Just because the majority of jackpot winners take the cash option, you can't say that this jackpot wasn't a $44 Million jackpot.

                "The jackpot is what it is."

                That's exactly right. The jackpot is what it is, and not what it will be somewhere down the road. It's a really simple concept.

                1.  $1 million a year for 26 years

                2. $26 Million

                Which of those is actually $26 Million? If you can't tell the difference I'd like to buy your house for 150% of its market value.

                  dvdiva's avatar - 8ball

                  United States
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                  September 17, 2003
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                  Posted: June 15, 2007, 12:56 am - IP Logged

                  Don't expect the idiots in Congress to have tax-free jackpots like the rest of the world. At least the Europeans and Canadians do it right.

                    guesser's avatar - Lottery-017.jpg

                    United States
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                    June 16, 2006
                    1969 Posts
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                    Posted: June 15, 2007, 9:29 am - IP Logged

                    The jackpot is what it is. The reason you're saying it's not, is because you think that all jackpots are in terms of actual present day cash value. That's not what a jackpot is. A jackpot is a TYPE of prize, and there are TERMS that go along with that prize. $44 Million over 26 years is EXACTLY what the jackpot was here. They took the cash OPTION. See, this is where most people think you're not getting what you  really won, but you did. The cash option is exactly that, an OPTION. Just because the majority of jackpot winners take the cash option, you can't say that this jackpot wasn't a $44 Million jackpot.

                    I never said it wasn't, I implied the tax is too high, regardless of if it's on the cash payout, or the annuity.

                    I know it will never change, I was just venting.. 

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                      United States
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                      Posted: June 15, 2007, 6:01 pm - IP Logged

                      lets not foget the current t-bill intrest rate of 5% heck 200k will give you 5k every 6 months in intrest imaging 25 mill interst  woooHat

                        Guru101's avatar - rw6jhh
                        Indiana
                        United States
                        Member #48725
                        January 7, 2007
                        1954 Posts
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                        Posted: June 15, 2007, 8:31 pm - IP Logged

                        "The jackpot is what it is."

                        That's exactly right. The jackpot is what it is, and not what it will be somewhere down the road. It's a really simple concept.

                        1.  $1 million a year for 26 years

                        2. $26 Million

                        Which of those is actually $26 Million? If you can't tell the difference I'd like to buy your house for 150% of its market value.

                        A jackpot isn't just an amount. It's the amount and the time in which that amount is to be paid. That defines what a jackpot is. For example, I could say "Saturday's PowerBall jackpot is $66 million", when in reality, the technical correct answer is "Saturday's PowerBall jackpot is $66 million over 29 years". Of course, most people just go ahead and use the first way of saying it. The lottery knows that a lot of people would rather have their prize in one lump sum, so they made a cash option.

                        Gonna win.Big Smile