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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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DC81's avatar - batman39
MI
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Posted: April 3, 2008, 10:58 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.

Yes because winning $400 is exactly the same as winning millions. Roll Eyes 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 to at least try to keep this sort of semblance of sanity when it comes to his life while  keeping things as low-key as possible when he claims it and also taking steps to try and protect your identity as well so every Tom, Dick, Harry, Mary, Sherry, Marion Berry, Mariah Carey, Ben & Jerry or whomever don't know just who you are and what you just came into. He’s now likely going to be on the mailing list of a hundred different annoying “charities”. Hey, maybe he himself is a tax lawyer (highly doubt it), maybe he has prior experience in financial planning and a successful portfolio, maybe he’ll at least do the smart thing afterwards, maybe he actually knows how to say "no" when it matters, maybe he'll be fiscally responsible and not buy things like a suits of medieval armor or a 500 year old tankard to drink beer from, though if he wants he's free to and for his sake doesn't do it on a whim or random stupidity. Maybe if needed, he'll get advice from the right people and actually listen to them. Sure there's more to it than just how you go about claiming but IMO it's still a lot better to do it in a way where as few people as possible know who you are and you're at least prepared.... Hopefully he'll fade back into obscurity and never be heard from again.

 


We'll find out in a few years if we ever hear from him again after a couple weeks. On one bright side, we haven't heard from Bucky or whatever his name was who won huge last year, have we? But there's still plenty of time...

    Coin Toss's avatar - shape barbed.jpg
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    Posted: April 3, 2008, 11:09 pm - IP Logged

    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 $1 million in your lifetime?

    This thread sure is a good argument for the Australian lotto (winner isn't taxed). I wonder how the Australians would handle giving away part of the winnings- to the tune of a million a pop.

    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.

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      Michigan
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      Posted: April 3, 2008, 11:20 pm - IP Logged

      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.

        DC81's avatar - batman39
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        Posted: April 3, 2008, 11:29 pm - IP Logged

        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 that was a half joke or he meant seperate locations) is a good idea. Then again I haven't been in this situation so I can't exactly say from personal experience. But I know I'd at least take a little time, calm down and protect my identity as well as I can. But he's apparently a "character" so this sort of thing might just fall into her personality.

        You can't predict random.

          Uff Da!'s avatar - InCelebration 001.jpg
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          Posted: April 3, 2008, 11:33 pm - IP Logged

          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.   

          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 suggested would cut the IRS standards of proof to allow him to save the money in gift taxes.

          I've mentioned this a few times before, but for the newer readers I'll repeat what I've done to save $$$ on gift taxes in the unlikely event I win the big one, since I want to share with family.  I have gifted a 25% interest in any MM ticket I purchase to a large number of my relatives.  The majority of them would receive a 1% interest; a few would receive 2%, one 5%, and I'd be left with 75%.  I have the document in writing, and upon the advice of a member of this board, I took it to the bank and had it notorized.  Doing so would, I believe, prove to the IRS that the gifts were partial interest in cheap tickets, not gifts of money after the win since the date of notorizing would make that clear.  I made the agreement valid for one year, giving me a chance to change my mind about the percentage to each person, about who I should include or even if I want to change my mind about gifting at all before drafting a new document.    I'm not going to look back now, but a while back when the jackpot got big I calculated that gifting in that manner would save me something like $13 or $17 million in gift and generation skipping taxes! 

          In my state the lottery will only make out one check, so we'd have to go through the legal steps of forming a partnership or corporation after the win if we won the big one, but the backup documentation would already be there that an agreement existed.  If we won a second or third tier prize, it would probably be more economical to just have me claim it in my name and gift the appropriate amounts to the others, as gift taxes wouldn't apply to those amounts.  I'd have to get their agreement to let me reduce their percentage by an appropriate amount for taxes, but with my relatives, I don't see that that would be a problem. 

            JackpotWanna's avatar - squiz

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            Posted: April 4, 2008, 1:01 am - 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.

            I Agree!    I rather be in his shoes too. 

              JackpotWanna's avatar - squiz

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              Posted: April 4, 2008, 1:10 am - 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?)

              So true.....

                justxploring's avatar - villiarna
                Wandering Aimlessly
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                Posted: April 4, 2008, 1:39 am - IP Logged

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

                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 might also be a way to cover up a gift.  Here is what Bankrate.com says.  It's 3 pages.

                http://www.bankrate.com/brm/news/retirement/20071001_gift_tax_a1.asp

                Bankrate agrees with with what I said earlier

                "Better yet, you can make $12,000 gifts to as many different donees as you want each year and then start making gifts all over again Jan. 1 of the next year. "

                  justxploring's avatar - villiarna
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                  Posted: April 4, 2008, 2:01 am - IP Logged

                  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! 

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                    Posted: April 4, 2008, 8:16 am - IP Logged

                    Yes because winning $400 is exactly the same as winning millions. Roll Eyes 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 to at least try to keep this sort of semblance of sanity when it comes to his life while  keeping things as low-key as possible when he claims it and also taking steps to try and protect your identity as well so every Tom, Dick, Harry, Mary, Sherry, Marion Berry, Mariah Carey, Ben & Jerry or whomever don't know just who you are and what you just came into. He’s now likely going to be on the mailing list of a hundred different annoying “charities”. Hey, maybe he himself is a tax lawyer (highly doubt it), maybe he has prior experience in financial planning and a successful portfolio, maybe he’ll at least do the smart thing afterwards, maybe he actually knows how to say "no" when it matters, maybe he'll be fiscally responsible and not buy things like a suits of medieval armor or a 500 year old tankard to drink beer from, though if he wants he's free to and for his sake doesn't do it on a whim or random stupidity. Maybe if needed, he'll get advice from the right people and actually listen to them. Sure there's more to it than just how you go about claiming but IMO it's still a lot better to do it in a way where as few people as possible know who you are and you're at least prepared.... Hopefully he'll fade back into obscurity and never be heard from again.

                     


                    We'll find out in a few years if we ever hear from him again after a couple weeks. On one bright side, we haven't heard from Bucky or whatever his name was who won huge last year, have we? But there's still plenty of time...

                    "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 regional lottery and make arrangements to file the claim in person. Each is paid differently but proper steps are exactly the same; the ticket must be validated.

                    "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."

                    You're sure hung up that. He won, you didn't, and it's his money to do whatever he wants with.

                    "Then again, maybe you're just one of those who buy into the idea of thinking it necessary to at least try to keep this sort of semblance of sanity when it comes to his life while  keeping things as low-key as possible when he claims it and also taking steps to try and protect your identity as well so every Tom, Dick, Harry, Mary, Sherry, Marion Berry, Mariah Carey, Ben & Jerry or whomever don't know just who you are and what you just came into."

                    It doesn't matter to me if they are blue or green, male or female, young or old, or married or single; I didn't win and I'll play again and take my chances. The thing that I don't buy into is playing the game doesn't give players the right to decide what are the proper steps the winner should take or how they should spend their money.

                    "He’s now likely going to be on the mailing list of a hundred different annoying “charities”."

                    You're making it sound like he was the very first person ever to win a huge jackpot. Most state lotteries have booklet explaining how to deal with things like that based on past experiences of other players. I wouldn't announce that I was giving people $1 million either but I didn't have the winning ticket and neither did you.

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                      Posted: April 4, 2008, 9:27 am - IP Logged

                      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 might also be a way to cover up a gift.  Here is what Bankrate.com says.  It's 3 pages.

                      http://www.bankrate.com/brm/news/retirement/20071001_gift_tax_a1.asp

                      Bankrate agrees with with what I said earlier

                      "Better yet, you can make $12,000 gifts to as many different donees as you want each year and then start making gifts all over again Jan. 1 of the next year. "

                      "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 for the next round of the "how will you spend it" or the "boy, were they dumb" threads are started. You and others have offered factual and sound advice on what can be done with lottery winnings and hopefully it will be used if the next big winner is a member of LP.

                        Uff Da!'s avatar - InCelebration 001.jpg
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                        Posted: April 4, 2008, 10:51 am - IP Logged

                        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! 

                        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 to handle money, but that they aren't the type who would be greedy for more.

                        I did, however, exclude on the gift document one relative in the younger generation who had been on drugs for years and has been in trouble with the law.  Though I understand she has cleaned up her act in the past year, it is far too soon to believe she might not end up using any money she received foolishly or even to kill herself.  Should I win, as long as she stays out of trouble I'd offer to pay her and her husband's medical expenses and for other things that could not easily be sold for drugs.  If I live long enough to see her remain drug free and otherwise sensible for 15-20 years, I'd probably do more to even things up between her and her siblings if the jackpot had been large enough that the siblings had received a lot more. 

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                          Posted: April 4, 2008, 4:20 pm - IP Logged

                          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.   

                          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 surprised if the IRS argues that the distribution sizes prove that your real intent was to give each person $1 million if you won. If the affidavit dates from an earlier drawing, when the claimed percentages don't just happen to work out to $1 million it stands a better chance of being decided in your favor. Consider that unless you have a valid contract, signed by the alledged giftees, there's no real proof that you would have shared if you won a smaller prize, because there's no way for the alledged donees to enforce the donation. OTOH, if your stated intent is to give each person 1 or 2% or to collectively give them 5 or 10%, and there's probably not much concern for the times that the even percentages also happen to work out to round numbers in dollars.

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                            Posted: April 4, 2008, 4:28 pm - IP Logged

                            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 might also be a way to cover up a gift.  Here is what Bankrate.com says.  It's 3 pages.

                            http://www.bankrate.com/brm/news/retirement/20071001_gift_tax_a1.asp

                            Bankrate agrees with with what I said earlier

                            "Better yet, you can make $12,000 gifts to as many different donees as you want each year and then start making gifts all over again Jan. 1 of the next year. "

                            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.

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                              Posted: April 4, 2008, 9:09 pm - IP Logged

                              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.