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David kills Goliath in Michigan will keep promise to friends!

Topic closed. 46 replies. Last post 9 years ago by AuntiePat.

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Coin Toss's avatar - shape barbed.jpg
Zeta Reticuli Star System
United States
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Posted: April 3, 2008, 6:31 pm - IP Logged

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?)

Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

Lep

There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

    justxploring's avatar - villiarna
    Wandering Aimlessly
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    Posted: April 3, 2008, 6:49 pm - IP Logged

    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 nothing to do with the gift.   Maybe you are thinking of FDIC and the $100,000 revocable trust?  I have no idea, but there is absolutely nothing in the IRS rules that says the person to whom you give a gift has to be related.

    BTW, in no way was I arguing with you.  When someone writes a "fact" that is incorrect, we all need to correct it so erroneous information doesn't get passed along, that's all.   Copying & pasting from another site to show me I'm wrong or to prove you weren't does not impress me.  Anyway, I am sure a gift can be given to anyone, even a total stranger. 

      justxploring's avatar - villiarna
      Wandering Aimlessly
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      Posted: April 3, 2008, 6:51 pm - IP Logged

      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?)

      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 any individual.  Technically, you are not supposed to give away more than a million bucks, but if you don't file a 709 (think that's the form) then that can't be tracked and is not deducted from your estate when you die.   As far as I understand the law, a person can write as many $12,000 checks to as many people as he/she wants.  It's like when you win $500 playing pick3.  You can win over and over again and never pay taxes, but if you win $10,000 at once, you do.  Again, you are supposed to report that income, but anyone would be a fool to do so if there is no record of the win.

      If there is an accountant or attorney on this board that knows otherwise, maybe that member can post a comment.

        fbird's avatar - nw archer.jpg
        White Lake,Mi
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        Posted: April 3, 2008, 7:07 pm - IP Logged

        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 !!!!!!!!!

        VAL

        Don't walk behind me; I may not lead. Don't walk in front of me: I may not follow.

        Just walk beside me and be my friend.

                  Albert Camus

          justxploring's avatar - villiarna
          Wandering Aimlessly
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          Posted: April 3, 2008, 7:12 pm - IP Logged

          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 !!!!!!!!!

          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 he can take the entire amount!  LOL  You can also form a trust or LLC that will state what each winner will get, like an office pool.  However, most of the the the IRS will want proof that this contract was created before you won. 

          I might be wrong, but IMO, no way will the lottery write separate percentages to different winners.  Please find me one example where this has ever been done. 

          By the way, the lottery also does not get involved in taxes.  It's not their job.  They deduct the required amount, usually 25%, and then the winner is responsible for whatever additional tax the IRS imposes and also state taxes, if any.

          Sure your idea sounds simple, and I agree it makes perfect sense, but you can't just make up a tax law as you go. 

          Maybe I shouldn't have posted this, because now I'm thinking you were probably just joking.

            Piaceri's avatar - sarsony1
            Republic of Texas
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            Posted: April 3, 2008, 7:14 pm - IP Logged

            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 would want another fat chunk.

            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 for him.  In the photo he looks like the average Michigan shop rat (that's an affectionate term btw) who has worked hard all his life.  His birthday was April 1 and his friends thought he was playing an April Fool's joke on him!

            Congrats to David S!! Party

              fbird's avatar - nw archer.jpg
              White Lake,Mi
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              Posted: April 3, 2008, 7:14 pm - IP Logged

              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 he can take the entire amount!  LOL  You can also form a trust or LLC that will state what each winner will get, like an office pool.  However, most of the the the IRS will want proof that this contract was created before you won. 

              I might be wrong, but IMO, no way will the lottery write separate percentages to different winners.  Please find me one example where this has ever been done. 

              By the way, the lottery also does not get involved in taxes.  It's not their job.  They deduct the required amount, usually 25%, and then the winner is responsible for whatever additional tax the IRS imposes and also state taxes, if any.

              Sure your idea sounds simple, and I agree it makes perfect sense, but you can't just make up a tax law as you go. 

              Maybe I shouldn't have posted this, because now I'm thinking you were probably just joking.

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

              VAL

              Don't walk behind me; I may not lead. Don't walk in front of me: I may not follow.

              Just walk beside me and be my friend.

                        Albert Camus

                justxploring's avatar - villiarna
                Wandering Aimlessly
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                Posted: April 3, 2008, 7:29 pm - IP Logged

                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!  Smiley

                Edit:  I still think the IRS would question the arrangement if it was a last minute thought.  The news article we are talking about said nothing about a partnership - just that he plans to give his friends each a $1M.   

                  RJOh's avatar - chipmunk
                  mid-Ohio
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                  Posted: April 3, 2008, 7:48 pm - IP Logged

                  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.

                   * you don't need to buy more tickets, just buy a winning ticket * 
                     
                               Evil Looking       

                    fbird's avatar - nw archer.jpg
                    White Lake,Mi
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                    Posted: April 3, 2008, 7:52 pm - IP Logged

                    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!  Smiley

                    Edit:  I still think the IRS would question the arrangement if it was a last minute thought.  The news article we are talking about said nothing about a partnership - just that he plans to give his friends each a $1M.   

                    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 another winner before her found away around this loophole, she took her time, it was about 3 months...but things were done her way. David here in mi, got his dough right away...no planning whatsoever. and as far as the IRS goes, as long as they get their money, they could give 2 hoots whether one person gives a ton or 16 people, collectively, give that same ton...LOL !!

                    VAL

                    Don't walk behind me; I may not lead. Don't walk in front of me: I may not follow.

                    Just walk beside me and be my friend.

                              Albert Camus

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                      Kentucky
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                      Posted: April 3, 2008, 8:51 pm - IP Logged

                      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.

                      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 the money is in their pocket and not how they cash their ticket. It's possible things will go bad for him, but I doubt he will trade his winning ticket for your losing ticket.

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                        Posted: April 3, 2008, 8:59 pm - IP Logged

                        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!  Smiley

                        Edit:  I still think the IRS would question the arrangement if it was a last minute thought.  The news article we are talking about said nothing about a partnership - just that he plans to give his friends each a $1M.   

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

                          fbird's avatar - nw archer.jpg
                          White Lake,Mi
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                          Posted: April 3, 2008, 9:04 pm - IP Logged

                          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 the money is in their pocket and not how they cash their ticket. It's possible things will go bad for him, but I doubt he will trade his winning ticket for your losing ticket.

                          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.............

                          VAL

                          Don't walk behind me; I may not lead. Don't walk in front of me: I may not follow.

                          Just walk beside me and be my friend.

                                    Albert Camus

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                            NASHVILLE, TENN
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                            Posted: April 3, 2008, 9:12 pm - IP Logged

                            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.

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                              Pittsburgh, PA
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                              Posted: April 3, 2008, 10:22 pm - IP Logged

                              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? 

                              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 taxation obviously.  It's like a kick in the balls to help people out.  There should be something like a transfer tax of 1% on large sums of money.  Thats more reasonable IMO. 

                              ***FINAL THOUGHT***I don't know if this is possible, but couldn't he of claimed the prize with his friends and said they had a proportional lottery pool.  He could have said his friends each had 1% of the pool and the payouts would be:

                              Guy who won: 97% (approx. $131m)

                              Friend 1: 0.75% (approx. $1m)

                              Friend 2: 0.75% (approx. $1m)

                              Friend 3: 0.75% (approx. $1m)

                              Friend 4: 0.75% (approx. $1m) 

                              In this scenario, if possible to do, would avoid anyone being taxed.  His friends would have to pay taxes, and would end up with around $600,000 each.  Guy who won also saves about $1m in gift taxes (WOW).  By cashing in his ticket so soon, he possibly blew away $1m. 

                              Ive always said if I won, the first thing I'd do is make a list of my creditors and a list of all the promises I've made.  After I pay off my debt and live up to my promises, I'm going to be extremely frugal. 

                              My prediction: This guy will attempt to save the world, and go broke doing so in less than 20 years.