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If you won a jackpot, how mcuh would you give to your parents?

Topic closed. 44 replies. Last post 8 years ago by myturn08.

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Washington State
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Posted: December 2, 2008, 6:32 pm - IP Logged

My parents aren't living.  I have, however, gifted a 30% share in any MM tickets I buy to a total of about two dozen relatives.  This includes siblings, stepchildren, step-grandchildren,  niece and nephews.  The amounts are not equal, as I feel it is appropriate to give more to close relatives than to more distant ones.  Since the arrangement is in writing and notarized, the gifts should not be subject to gift taxes.  With the current jackpot, that would leave between half a million and a million dollars to most of them after taxes, a nice sum to help live out their retirement for those already retired and a nice supplement to income for those still working.  During my lifetime I'd also gift amounts to cover major medical expenses to those who needed it.  Most of my relatives are pretty savvy about finances and I wouldn't expect any to just blow it. 

Average life expectancy for someone my age is less than twenty more years, so it would make sense for me to pass some of a large windfall along in a manner that could avoid some of the estate taxes my heirs would pay if I instead just waited until my death to pass it all along.

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    San Diego, CA
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    Posted: December 2, 2008, 6:36 pm - IP Logged

    I should have mentioned in my first post.

     

    There is a $10,000 maximum gift that can be given without paying taxes.  Any gift amount after that is taxed at 50%!

      GamerMom's avatar - tails

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      Posted: December 2, 2008, 7:20 pm - IP Logged

      I should have mentioned in my first post.

       

      There is a $10,000 maximum gift that can be given without paying taxes.  Any gift amount after that is taxed at 50%!

      I thought it was 12k??

       

      to answer your Q: Not a penny, unless they found out.  I would only tell my hubby and his mom (she is in a very bad empolyment situation right now and i love her dearly) if I won and they better keep their traps shut.  I wouldn't draw attention to myself by buying new cars or even furniture.  I'm very happy where I live at the moment, love my neighbors and community.  I actually don't even think I would quit my job, as I work from home.  We would take lavish vacations and travel but hopefully no one would be the wiser.  I'm too afraid of being robbed or my kids being held for ransom.

       

      But speaking to the giving my MIL $$$ I suppose I would do weird things to avoid paying a gift tax like buying her gift cards and putting her on my credit card account with a card sent out in her name.  I didn't realize you had to pay a gift tax if you paid off someone's house???  If you withdraw cash out of the bank and give it to someone I don't understand how it can be taxed...

        DC81's avatar - batman39
        MI
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        Posted: December 2, 2008, 8:02 pm - IP Logged

        It is currently $12,000 and I believe the current Gift Tax is 45% which IMO is just nuts and you're the one that has to pay it. Oh and if there's one part of the government that you shouldn't mess with it's the IRS. So that million dollars would end up costing you 1.45M.. Huge waste of money, even if you did just win 100M. Not like that would stop some "family" from bugging you for it, at least some of mine anyway. I can already hear what they'd say if they found out and I gave them something.

        "You won millions of dollars and all you gave me was 12 grand you greedy ********! You don't even deserve it!" *Cue the start of their plotting to extort more or flat out try to rob me.*

        Ahh, my family.... I sure wouldn't miss them... I do think the best method if they find out would be to use the "it's all tied up in investments" excuse. Not to mention how much more fun it'd be if I didn't bother trying to protect my identity and the ones that would come out of the woodwork, I'm sure even my "father" would be getting into contact with me despite never being in my life or contributing at all.

        Rant

        You can't predict random.

          GamerMom's avatar - tails

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          Posted: December 2, 2008, 8:05 pm - IP Logged

          It is currently $12,000 and I believe the current Gift Tax is 45% which IMO is just nuts and you're the one that has to pay it. Oh and if there's one part of the government that you shouldn't mess with it's the IRS. So that million dollars would end up costing you 1.45M.. Huge waste of money, even if you did just win 100M. Not like that would stop some "family" from bugging you for it, at least some of mine anyway. I can already hear what they'd say if they found out and I gave them something.

          "You won millions of dollars and all you gave me was 12 grand you greedy ********! You don't even deserve it!" *Cue the start of their plotting to extort more or flat out try to rob me.*

          Ahh, my family.... I sure wouldn't miss them... I do think the best method if they find out would be to use the "it's all tied up in investments" excuse. Not to mention how much more fun it'd be if I didn't bother trying to protect my identity and the ones that would come out of the woodwork, I'm sure even my "father" would be getting into contact with me despite never being in my life or contributing at all.

          Rant

          that's why I choose the annuity...I honestly can say all of the $$$ is tied up!!

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            San Diego, CA
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            Posted: December 2, 2008, 8:21 pm - IP Logged

            It is currently $12,000 and I believe the current Gift Tax is 45% which IMO is just nuts and you're the one that has to pay it. Oh and if there's one part of the government that you shouldn't mess with it's the IRS. So that million dollars would end up costing you 1.45M.. Huge waste of money, even if you did just win 100M. Not like that would stop some "family" from bugging you for it, at least some of mine anyway. I can already hear what they'd say if they found out and I gave them something.

            "You won millions of dollars and all you gave me was 12 grand you greedy ********! You don't even deserve it!" *Cue the start of their plotting to extort more or flat out try to rob me.*

            Ahh, my family.... I sure wouldn't miss them... I do think the best method if they find out would be to use the "it's all tied up in investments" excuse. Not to mention how much more fun it'd be if I didn't bother trying to protect my identity and the ones that would come out of the woodwork, I'm sure even my "father" would be getting into contact with me despite never being in my life or contributing at all.

            Rant

            You are right.  My "friends" and family would say, "just pay the tax, you won't feel it."

            If I were you, I wouldn't feel bad about it.  I am sure everyone would have those stories.

             

            I am not being hypocritical either.  If a friend won, I wouldn't expect much.  Definitely nothing more than the gift tax threshold.

              chippie's avatar - Lottery-064.jpg

              Bahamas
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              Posted: December 2, 2008, 8:23 pm - IP Logged

              Say you won a 40 million dollar annuity jackpot.  If you could split the money, how much would you give to your parents?

               

              Does the lottery commissions even allow splitting the prize? 

              What ever my daddy needed, no questions asked..!

              Once I have collected he would be set....

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                San Diego, CA
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                Posted: December 2, 2008, 8:25 pm - IP Logged

                I thought it was 12k??

                 

                to answer your Q: Not a penny, unless they found out.  I would only tell my hubby and his mom (she is in a very bad empolyment situation right now and i love her dearly) if I won and they better keep their traps shut.  I wouldn't draw attention to myself by buying new cars or even furniture.  I'm very happy where I live at the moment, love my neighbors and community.  I actually don't even think I would quit my job, as I work from home.  We would take lavish vacations and travel but hopefully no one would be the wiser.  I'm too afraid of being robbed or my kids being held for ransom.

                 

                But speaking to the giving my MIL $$$ I suppose I would do weird things to avoid paying a gift tax like buying her gift cards and putting her on my credit card account with a card sent out in her name.  I didn't realize you had to pay a gift tax if you paid off someone's house???  If you withdraw cash out of the bank and give it to someone I don't understand how it can be taxed...

                "

                But speaking to the giving my MIL $$$ I suppose I would do weird things to avoid paying a gift tax like buying her gift cards and putting her on my credit card account with a card sent out in her name.  I didn't realize you had to pay a gift tax if you paid off someone's house???  If you withdraw cash out of the bank and give it to someone I don't understand how it can be taxed..."

                I am certain all this stuff is considered a gift.  Including a house.

                 

                I believe higher income people are more likely to be audited.

                The problem is, if you buy someone something, and you are audited, the IRS will dig deep to find out where the huge expense is.  Busted= jail time.  Most likely a year minimum.  NOT worth the risk.

                  GamerMom's avatar - tails

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                  Posted: December 2, 2008, 8:31 pm - IP Logged

                  "

                  But speaking to the giving my MIL $$$ I suppose I would do weird things to avoid paying a gift tax like buying her gift cards and putting her on my credit card account with a card sent out in her name.  I didn't realize you had to pay a gift tax if you paid off someone's house???  If you withdraw cash out of the bank and give it to someone I don't understand how it can be taxed..."

                  I am certain all this stuff is considered a gift.  Including a house.

                   

                  I believe higher income people are more likely to be audited.

                  The problem is, if you buy someone something, and you are audited, the IRS will dig deep to find out where the huge expense is.  Busted= jail time.  Most likely a year minimum.  NOT worth the risk.

                  what if you buy a house but let someone else take up residence there free of charge?

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                    San Diego, CA
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                    Posted: December 2, 2008, 8:42 pm - IP Logged

                    You know what. I asked this question on a tax message board.  Below is the thread.

                     

                    http://boards.live.com/thread.aspx?ThreadId=686721&BoardName=Hide&header=SearchOnly&Footer=Show&BoardsParam=HIPDelay%3D1&LinkTarget=_parent&pagestyle=money1&ForumId=18

                     

                    It is a grey area.  A gift tax attorney would need to be contacted.

                      JackpotWanna's avatar - squiz

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                      Posted: December 2, 2008, 10:42 pm - IP Logged

                      You know what. I asked this question on a tax message board.  Below is the thread.

                       

                      http://boards.live.com/thread.aspx?ThreadId=686721&BoardName=Hide&header=SearchOnly&Footer=Show&BoardsParam=HIPDelay%3D1&LinkTarget=_parent&pagestyle=money1&ForumId=18

                       

                      It is a grey area.  A gift tax attorney would need to be contacted.

                      How about hiring them to your work staff and paying them a large salary?

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                        Posted: December 4, 2008, 2:35 pm - IP Logged

                        You know what. I asked this question on a tax message board.  Below is the thread.

                         

                        http://boards.live.com/thread.aspx?ThreadId=686721&BoardName=Hide&header=SearchOnly&Footer=Show&BoardsParam=HIPDelay%3D1&LinkTarget=_parent&pagestyle=money1&ForumId=18

                         

                        It is a grey area.  A gift tax attorney would need to be contacted.

                        There's nothing grey about it. You are giving them something of value without asking for something of similar value in return. That's exactlywhat a gift is. The samething is true of loaning them money and charging an interest rate that is below normal market rates. The only question is how easily the IRS might discover what you're doing.

                        Obvioulsy the best thing is to make a gift of shares in the ticket while the value of the ticket is still $1. That will eliminate the possibility of paying gift taxes, but that doesn't mean the IRS can'tstill get a share of their own. Everybody is going to die, and your parents will probably die before you do, which means they'll presumably be leaving an estate behind. It would be silly to avoid gift taxes while giving your parents $10 million, and then having the IRS collect several million in estate taxes somewhere down the road.

                          Coin Toss's avatar - shape barbed.jpg
                          Zeta Reticuli Star System
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                          Posted: December 4, 2008, 6:00 pm - IP Logged

                          KYFloyd

                          "There's nothing grey about it. You are giving them something of value without asking for something of similar value in return"

                          That's the exact same agrgument Nevada casino dealers used with the IRS in trying to keep yips from being taxed. Didn't work.

                          It was called the Wendell Oakes case. At first the dealers won, then it was appealed and the arguemtn above was thrown out.

                          Oakes was a dealer at the time at the Las Vegas Hilton. The IRS had agents hangin out in the casino, posing as tourists. At the end of the shift, whrn the toke (tips) committee collected all the tokes and took them to the cage, the IRS came up with an inflated figure for their guess at what the dealers were making.

                          When the court asked them how they determined the amount, an IRS agent actually said in court, "There were a lot of green chips ($25) in the tip buckets."

                          At first that won the case for the dealers, but when it was appealed the "gift" argument went right out the window.

                          Whenever it comes to the IRS and gambling, the IRS always wins.

                          The IRS actually has people that are assigned to catch TV game shows to record contestants names and how much they win. Over a certain amount, and knock knock. There's actually beeen people who have won high end cars that have wound up worse than they were financially before winning the car.

                          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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                            Entertaiment Capital
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                            Posted: December 4, 2008, 11:56 pm - IP Logged

                             40 millions annuity? I don't like annuity so let's say I receive 18 millions after tax and everything. (lump sum)

                             10% goes to my parents. That's it. Another 10% goes to my two sisters. That's it.

                             Still, I get to keep about 14.4 millions. I'd spend about 1 million for the house and 0.4 million for furnishing the house with usual geeky stuff.

                             What should I do with 13 millions then? Some goes to CD. Some goes to Ginnie Mae fund (which seems to be recession proof). Some stays in the good ol' Orange Savings Account.

                             Then I will buy a commercial property. And part of the incomes coming from the property goes to my sisters and parents. They will be set.

                             The point is, I am not gonna give away a huge chunk of my winning to anyone. I will give some of the incomes generated by the winning, but not the big chunk from the beginning.

                              DC81's avatar - batman39
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                              Posted: December 5, 2008, 12:22 am - IP Logged

                              I think a lot of winners go a bit crazy with "spreading the wealth" and have no idea what kind of taxes they'll really be incurring by doing so, which leads to trouble.

                              Unless you have a pre-written, notarized document agreeing to that 10% thing, you're going to probably end up also paying 45% back to the taxman, as stupid as gift taxes are. So that 3.6M would turn into something like, 5.172M thanks to it (with four 12K exemptions) and I'm pretty sure its the giver of the gift that has to pay it, as dumb as that is, you'd end up with something like 12.828M for the million dollar home, furnishings and investments. Still a nice amount of money left over but just something to remember when giving gifts of any significant value.

                              You can't predict random.