OT: Powerball

betterthanthealternative said:

There's a pretty good argument for taking the annuity here: http://www.nytimes.com/2016/01/13/u...column-region&region=top-news&WT.nav=top-news

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Sure there is a strong argument to take the annuity for tax purposes. But if you are going to make $460 million after taxes with the lump sum, do you really care? It is more money than you will ever spend.

My biggest fear is that if you take the annuity is the money protected?

What if 15-20 years from now the U.S. government goes bankrupt or there is another Great Depression? Will that money go away?

What if the federal income tax rate skyrockets to 60-70% for the highest tax bracket in ten years?

The government will invest them in US bonds and those could be worthless in an economic disaster. If you have all the money, you would have probably parked the money off shore if there was pending doom with the U.S. economy.

Also, the U.S. bonds will lose some of their value if the interest rates rise significantly.

And don't forget that Illinois has already put a moratorium on paying out lottery winnings over a certain amount because of their economic crisis. What happens if you show up to get your year's annuity payment and they tell you that they are not paying out any money until they get their own house in order and tells you to come back in a few years?

I can buy several nice houses, a yacht, tons of cars, etc. and invest the rest and live like a king for the rest of my life with the cash out.

Rob0729 said:

Sure there is a strong argument to take the annuity for tax purposes.

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On the other hand, the annuity can cause massive estate tax problems if you die before the end of the annuity. This annuity is term-certain -- it will pay out for 30 years even if you die before the 30 years is up.

So when you die there is remaining value in the annuity -- the value of the years yet to be paid out. For estate tax purposes the net present value of the remaining payments is used. So lets say you die after 15 years -- so 15 years to go. The NPV of $50mil/yr for 15 years at a 4% discount rate is $556mil.

That $556mil goes on your estate tax return and will result in an estate tax due of around $278mil. Unfortunately, your heirs are only getting $50mil/yr. Good luck paying! They will probably have to sell the payment stream to a factoring company in return for a lump sum and will lose money on the deal since they probably won't be given a great deal relative to the true NPV.

Would Krafty sell a chunk of the team?

$460 mill lump sum invested at 3% compounded tax free for 30 years = $1.116 billion

$460 mill lump sum invested at 5% tax free for 30 years= $1.988 billion

Now if you bought the ticket in Florida...lump sum of $560 million after 39.6% taxes removed .....3% tax free = $1.3 billion .........at 5% tax free=$2.420 billion.....at 10% tax free (a dream)=$9.771 billion

Anyone who chooses the lump sum is numb. There are taxable annuities you can buy with the lump sum that yield 5-7% that crush the lottery's return. Best advice to the winning chowderhead, get the hell out of Taxachusetts ASAP

BobDigital said:

It is true that the lump sum is less but some obvious benefits are not included in this

#1 Inflation is not factored in. Lets say for the sake of argument you get 300M over installments over 30 years 180M right now. Lets say inflation doubles in that time making 2 dollars today worth 1. That is not unlikely at all. This means that your 300M over 30 years is now instead a total worth the amount of 200M or so.

#2 The possibility to invest. if you get that 150M working for you right now it is not at all impossible you could double or even triple it over that 30 year time frame.

I could take about more but need to go Interesting topic though.

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You can also lose it investing, not to mention the countless hours you would ahve to spend with accountants etc to manage it all lol

I could sleep soundly on $25 mill a year for the next 30 years, no matter how much inflation there is

I'll go if I'm allowed to streak.

Buy the Playboy mansion ... fix the place ... and go live with Hef ...

Hookers and cocaine for everyone!

I'll match. Plus, personalized jerseys for every member with their handle on the back.

Been warning people I know on Twitter and Facebook who post their Massachusetts Power Ball tickets in full. If anyone who works at a store with lottery machine they can run you tickets thru the machine just by using the serial code ticket number. And if you won anything under $599 they can cash it without need the ticket present. Just beware don't post your ticket anywhere online.

If I win I will pay the $150 Million termination fee to get rid of Goodell.

betterthanthealternative said:

Just so people here aren't making firm plans with bad information. After taxes:

• The 30 year annuity payment is about $25M per, depending on where you live
  
• The lump sum payout is about $460M, also depending on where you live.

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If the lottery prize is 1.3 billion (the projected amount when I posted) then the lump sum payout is "only" 460 million? Even living in Taxachusetts that doesn't seem right.

Again, the NYT articles will explain most the questions posted here very well, including the tax issues.
They don't take governmental or economic collapse into consideration, however.

http://www.nytimes.com/2016/01/13/u...n-region&region=top-news&WT.nav=top-news&_r=0

http://www.nytimes.com/2016/01/13/u...column-region&region=top-news&WT.nav=top-news

nabwong said:

I don't know man.

$25m for 30 years is $750m for doing nothing.

$460m works out to 18 years on a 25m average. Then you have to work to increase it.

I think i'd go for $25m annually.

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If you're a millennial or close to it, the annuity is the best bet. That's what I'm going to do too when I win it.

Started playing Powerball and its predecessor when it was known as "Lotto America" in 1987, have pretty much played the same sets of numbers faithfully since then, have added some grandchildren's birth dates.. the most I won was $100 dollars, but most of the time I come up empty...

As best I can remember have never missed a drawing..My fear is that if I miss a draw with my numbers, then those numbers will come up.. what a freaking quandary this has turned into.

Website with tax calculations. MA residents would see $651M in a one-time lump sum after tax on a $1.5B jackpot.
Powerball Jackpot Analysis | USA Mega

Hammer of Thor said:

Website with tax calculations. MA residents would see $651M in a one-time lump sum after tax on a $1.5B jackpot.
Powerball Jackpot Analysis | USA Mega

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The problem is that they only take 25% federal tax out when they give the check and the max tax rate is 39.6%. So you will still have to pay about $136 million to the government next April. So after that, you have about $515 million.

You know even if the Times is right and you can make much more money with the annuity, who is going to blow through $515 million in several lifetimes unless they are really stupid?

A lottery is a tax on the innumerate.
Nonetheless, I will throw $50 at it, because the prize is so high that it provides some entertainment value.

Trust no one.
If you win, take Deniro's Goodfellas' character's advice. Tell no one. Not even your family. Find a big name law firm with deep pockets. Demand a meeting with the founding partner who's name appears first. Pay them to execute your wishes. You will never understand all the complexities of what is coming, pay a team of people to get it right.

A bird in the hand is worth two in the bush.
Take the lump sum. Divide it and place it overseas in several tax havens, so that it can grow unmolested. Let the feds/state take their cut now, but why keep feeding their irresponsible spending in the future?

It's a small world after all.
Obtain dual citizenship and at least one foreign passport. See the world.

$651 million? That's like... 300 million crunchwrap supremes. What a happy death

In the event that the Patriots aren't in the Super Bowl, can we still go just to yell loudly about how much we dislike the NFL front office?