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Charles W. Jackson Jr, 66, is a retired retailer from Cumberland County, North Carolina
On Saturday, he purchased a Powerball ticket from a convenience store in Hope Mills, North Carolina
Jackson chose some of the numbers based on a fortune cookie he received from his granddaughter
Initially, he thought he won just $50,000 and began to make the trip to Raleigh to collect
But he took another look at the ticket and noticed: 'Dang, I got them all'
After paying taxes on his winnings, Jackson will receive a lump sum of $158million

https://www.dailymail.co.uk/news/article-7105677/Fortune-coo...

t
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Darn! I was really hoping for that lobster dinner this time!




Seattle Pioneer
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Tele I drove to Kroger this morning and filled my van up with gas and then bought two sets of numbers for the Megamillions drawing on Friday night. Megamillions rolled over last night and the cash option is now $343,900,000 - 37% federal income tax = $$216,657,000.

The 30 year annuity is $530,000,000 but they amortize the payout for inflation so I'd start out with a much smaller amount and then ~ 30 years later I'd get a much larger payment. I highly doubt I'll be around 30 years from now so I plan on taking the cash option. <grin>

Almost everyone takes the cash option when they win the lottery.

Art
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Almost everyone takes the cash option when they win the lottery.

Art


-------------------

I also understand that it is quite common for big nine figure winners to have all their internet buddies down to Florida for an all you can eat lobsterfest weekend to celebrate.
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<<The 30 year annuity is $530,000,000 but they amortize the payout for inflation so I'd start out with a much smaller amount and then ~ 30 years later I'd get a much larger payment. I highly doubt I'll be around 30 years from now so I plan on taking the cash option. <grin>>>




Come onnnnnnnnnnnnnnnnnnnnnn Artie!



Seattle Pioneer
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<<Almost everyone takes the cash option when they win the lottery.

Art

-------------------

I also understand that it is quite common for big nine figure winners to have all their internet buddies down to Florida for an all you can eat lobsterfest weekend to celebrate.>>



Heh, heh! I've heard of that tradition, too!


Seattle Pioneer
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OK....as Dr. Clayton Forrester (MST3K) liked to say..."every party needs its pooper"...So allow me to be the party-pooper on mega-winnings.

The advertised amount of the mega-millions/Mega Jackpot/Powerball/whatevername multi-state lotteries winnings is typically at 3 times the size of what the winner will actually end up with. Here's an example:

Advertised winnings: $1,500,000,000 ($1.5B)

50% goes to the states (lump sum option), leaving $750,000,000

Fed tax, at this level, will be 36.99% Fed tax, as the total of deductions for the average household will be a tiny, tiny fraction of 1% of the winnings and the amount taxed in the 10% to 35% brackets amounts to about .02% of the winnings being taxed. Thus, leaving, rounded, $472,500,000. Note, the Feds withhold 24% by law, but clearly this is just under 13% short of what the actual tax will be. The media ALWAYS says this wrong....they say "after paying the state and taxes...". 24% is NOT the Fed and possibly State tax due on the winnings.

State tax, unless the winnings are in one of the no-state tax states or CA or DE (do not tax lotto winnings), must be paid. So for one who wins in NY, the state tax on lotto winnings is 8.82%, leaving about $430,825,000.

This means the actual take home in NY of $430,825,000 is 28.7% of the quoted winnings and not even close to the advertised $1.5B that was printed out on the over-sized check and held up so all the media cameras could get it for prime time.

Every time I explain this, I'm hit with a boisterous "Well Break my heart!!! Who's complaining??!! You still get $430,825,000" or some other equivalent words of disbelief of my stupidity. This loud response demonstrates why the multi-state lotto system works. By organizing as a multi-state lotto, the total of ticket purchases will be much, much greater than any single state could do, which makes the "winnings" an incomprehensibly large number to just about any winner that doesn't have the assets of Bill Gates or his equivalent. So to the average work-a-day or retired Joe out there, $430 Million is the same size as $1.5B....they are simply too big for the average person to distinguish in their own bank account. For conceptual purposes, they are the same number.

To test this theory, go back and redo the winnings but make the proclaimed winnings $1,000 from the multi-state lottery to a NY resident...a number well within the average persons sense of financial reality. Of course, all the %'s would change, but let's hold them constant for this example. So the announcement is made, confetti is thrown, news people swoon and ask what the winner will do with his new found wealth, cameras are there, much jubilation and so on. Then after everything as settled down, the lotto winner goes to the lotto office and is handed a check for $287 (let's say the lotto actually paid the winners state and Fed tax). What do you think the winner would say? How about...."HEY...WHERE'S MY $1,000!?!?!? THIS IS A RIP-OFF!!! I'VE BEEN CHEATED!!! YOU LIED TO ME!!! Followed by other unfriendly and nasty language. The average Joe knows the difference between $1,000 and $287, but not the difference between $430.8MM and $1.5B.

And yes, most winners take the lump sum. But unless the winner lives in AZ or MD (taxes out of state winners) but lives in a state that otherwise taxes the lotto winnings, it would probably be better to take the 29 year annuity payments and in the second year, relocate to a state with no state tax. For NY, the first year of 29 year graduated annuity (increases each year) rate of 5%/yr would provide about $10MM the first year using the above figures, then move to, say, TX. This would save about $65.6MM in state tax over the next 30 years.

BruceM
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BruceM:"And yes, most winners take the lump sum. But unless the winner lives in AZ or MD (taxes out of state winners) but lives in a state that otherwise taxes the lotto winnings, it would probably be better to take the 29 year annuity payments and in the second year, relocate to a state with no state tax. For NY, the first year of 29 year graduated annuity (increases each year) rate of 5%/yr would provide about $10MM the first year using the above figures, then move to, say, TX. This would save about $65.6MM in state tax over the next 30 years."

Nothing is going to displace Artimus from TN. Nothing short of the entire state disappearing under a mile of ice in the next ice age.

Now if 'tele' won, he already lives in a state with no state income tax......

Guess same for intercst and some of the other denizens of the board....


t.
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"
Tele I drove to Kroger this morning and filled my van up with gas and then bought two sets of numbers for the Megamillions drawing on Friday night. Megamillions rolled over last night and the cash option is now $343,900,000 - 37% federal income tax = $$216,657,000. "


art

This is about the only time doing math is still fun/
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50% goes to the states (lump sum option), leaving $750,000,000

Can you provide a link where the requirement to pay the states 50% of your winnings can be verified. My understanding is that state taxes in you state of residence are withheld only, not in addition to a 50% shakedown.
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50% goes to the states (lump sum option), leaving $750,000,000

Can you provide a link where the requirement to pay the states 50% of your winnings can be verified. My understanding is that state taxes in you state of residence are withheld only, not in addition to a 50% shakedown. </>

The post is approximately correct about the effect, but wrong about the mechanism.

If you win a "$100 million" prize, what that means is you get a (typically) 20- or 30-year annuity with a total payout of $100 million. This is typically purchased from an insurance company, for rather less than $100 million - $50 million isn't exactly correct, but it's close enough for discussion purposes.

If you choose the lump-sum option, you get handed the price of that annuity.

There IS NO "$100 million" being divided up at the time you claim the prize. There's only the price of the annuity, and determining whether that price is handed to you or to an insurance company.
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Can you provide a link where the requirement to pay the states 50% of your winnings can be verified

From the Powerball wiki https://en.wikipedia.org/wiki/Powerball

The advertised estimated jackpot represents the total payments that would be paid to jackpot winner(s) should they accept the annuity option.

And from an article from the Tax Foundation at https://taxfoundation.org/lottery-tax-withholding-2019/

After all, the coffers of the 44 participating jurisdictions get a slice of every jackpot, as only about half of Powerball ticket revenue is given out in the form of prizes (lower than the average for other lottery games). The rest of the jackpot, minus the consortium’s administrative costs, goes toward those jurisdictions.

Its all Time-Value-Of-Money. There are several derived numbers vs the actual ticket sales....

Total multi-state ticket sales
minus operating expenses including payment to the ticket sellers
Future value of net proceeds over 30 years
Inflation adjusted annuity amount whose future value equals future value of net ticket sales (this is the stated winnings)
Present value of that annuity stream, using Multi-State Lottery Commission mandated discount rate. This is the lump sum payment amount

Essentially, the states make most of their revenue from the excess of the current ticket sales over expenses and the present value of the future accumulation...which usually works out to about 50% of ticket sales. State sales tax revenues are small compared to ticket sales and several states in the multi-state system, TX being the largest, have NO sales tax.

BruceM
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And from an article from the Tax Foundation at https://taxfoundation.org/lottery-tax-withholding-2019/

After all, the coffers of the 44 participating jurisdictions get a slice of every jackpot, as only about half of Powerball ticket revenue is given out in the form of prizes (lower than the average for other lottery games). The rest of the jackpot, minus the consortium’s administrative costs, goes toward those jurisdictions.


That's a poor explanation of what happens. The states get about 1/2 of the ticket sales, not of the jackpot. The remaining 1/2 becomes all of the various winnings - with the lion's share obviously going to the top level jackpot.

warrl has it right. The headline figure is the total of the annuity payments. The present value of that annuity - the lump sum option - is what it would it would cost to buy the headline annuity.

But the rest of your analysis - and most importantly - your conclusion is spot on. As a ballpark figure, the winner is going to end up with about 1/3 of the headline total after taxes if they take the lump-sum option.

--Peter
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"I also understand that it is quite common for big nine figure winners to have all their internet buddies down to Florida for an all you can eat lobsterfest weekend to celebrate." - Bighairymike
------------------
"Heh, heh! I've heard of that tradition, too!" - Seattle Pioneer

------------------------


How about I just buy a nice big house with a lot of bedrooms in Vero Beach, Florida and ya'll can come down and visit us and somewhere in that visit we'll buy some lobster tails and cook them ourselves? I'll buy a nice big grill and we can cooks steaks and lobster and maybe we'll have a swimming pool too? Who knows? I'll take you to Sebastian Inlet state park fishing and also maybe we can go out on a boat and do some fishing? The water in Vero Beach is usually really clear and we can do some snorkeling too?

That way my relatives (which I have a lot of of, remember my brother is a Darwinist and believes whoever leaves the most offspring is the winner) can come later and visit too?

This would be more doable for me. I prefer smaller groups when I have folks over.

Art
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"Nothing is going to displace Artimus from TN. Nothing short of the entire state disappearing under a mile of ice in the next ice age. Now if 'tele' won, he already lives in a state with no state income tax. Guess same for intercst and some of the other denizens of the board." tele
-------------------------------------


Tennessee doesn't have a state income tax and there is no tax on lottery winnings in Tennessee. They do have the Hall's tax on dividends but they are working on getting rid of that.

I married a Tennessee girl and she ain't going nowhere. People from Tennessee love Tennessee.

Art
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"People from Tennessee love Tennessee.

Art "

***********************************************************

It is a quite lovely State. I thoroughly enjoy visiting East Tennessee and
look forward to visiting Nashville and points around the State.

Howie52
Course, I expect to enjoy visiting most of the states over the next several years.
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"I expect to enjoy visiting most of the states over the next several years"

Follow 0bama's route and you'll visit 57 of them.

RayB
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How about I just buy a nice big house with a lot of bedrooms in Vero Beach, Florida and ya'll can come down and visit us and somewhere in that visit we'll buy some lobster tails and cook them ourselves? I'll buy a nice big grill and we can cooks steaks and lobster and maybe we'll have a swimming pool too? Who knows? I'll take you to Sebastian Inlet state park fishing and also maybe we can go out on a boat and do some fishing? The water in Vero Beach is usually really clear and we can do some snorkeling too? - Art

-----------------

Fishing, snorkeling, good food, good company... I'm in. Do we have to get there on our own or will you be sending the Gulfstream?
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<<Fishing, snorkeling, good food, good company... I'm in. Do we have to get there on our own or will you be sending the Gulfstream?>>



I'm willing to drive down to Portland, Or. so Art can pick up intercst and I with just one stop.


Seattle Pioneer
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"Fishing, snorkeling, good food, good company... I'm in. Do we have to get there on our own or will you be sending the Gulfstream?" - Bighairymike


I'm afraid you'll have to arrange your own transportation. Getting you there sounds too much like work to me and like my best friend from college said to me one time, "Art responsibility rolls off you like water off a duck's back." <grin>


Art
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"I'm willing to drive down to Portland, Or. so Art can pick up intercst and I with just one stop." - Seattle Pioneer


Sorry but you'll have to get your own butts down to Florida.

Art
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"I'm afraid you'll have to arrange your own transportation. Getting you there sounds too much like work to me and like my best friend from college said to me one time, "Art responsibility rolls off you like water off a duck's back." <grin>"

One of your secretaries can handle the travel detail, arrange for all the BBQ and steaks to be delivered to your mansion by the sea.

One the way back from Portland, the plane can pick up tele in Dallas.....


t.
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One the way back from Portland, the plane can pick up tele in Dallas.....


t.


-------------

Since you passing through, you might as well swing south and pick me up while you are at it. I would prefer you land at nearby Montgomery County Airport but if the runway is too short for your Gulfstream, I could drive down to Houston.
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<<One the way back from Portland, the plane can pick up tele in Dallas.....


t.>>



tele is well known for being the life of the party.


Seattle Pioneer
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Years ago, Art and I had a cyber handshake deal that we would both get a ticket when the jackpot was really high. If either of us won, we would split it with the other.

I go years without buying a lottery ticket. So, if Art wins, I'll drive to wherever the party is to congratulate him. I do hope to see him before then as the odds of him winning is really low.

Fool on,

mazske
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Dang..another missed opportunity


Single ticket winner in California secures massive $530MILLION jackpot that is the seventh-largest Mega Million drawing in lottery's history

The fortunate ticket buyer matched all six numbers when they purchased the ticket on Friday night in California
Numbers were 17, 19, 27, 40 and 68 with a gold Mega Ball of 2
It is the largest jackpot drawing since last October, when the jackpot was a staggering $1.5billion
It's the seventh-largest jackpot in the lottery's history
Cash option for the large haul comes in at $345.2million

https://www.dailymail.co.uk/news/article-7118967/Single-tick...


t
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". I do hope to see him before then as the odds of him winning is really low.

Fool on,

mazske "

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

The idea of seeing friends is much more appealing than most other options.

Howie52
Course, lobster does make an appealing meal.
I prefer Maine to Florida - but everyone has their own perference.
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"Years ago, Art and I had a cyber handshake deal that we would both get a ticket when the jackpot was really high. If either of us won, we would split it with the other. I go years without buying a lottery ticket. So, if Art wins, I'll drive to wherever the party is to congratulate him. I do hope to see him before then as the odds of him winning is really low." Fool on, mazske


??? Mark I'm sorry but I really don't remember that? I have promised to share any substantial winnings that I might win with my brother and other family members and that pretty well depletes any jackpot I might win? There are a lot of us....

So... if we did have that deal (which I don't remember) I'm sorry but it is over now because I've got a big family and every one of them is expecting a piece of the pie. But I wish you the best of luck. You've got a beautiful family and I know you'll take care of them with your winnings.

By the way someone in California won that huge Megamillions jackpot on Friday night. The annuity has dropped back to $40 million.

Art
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Makes a good tall tale though.
And the reality of the situation should not require any lost sleep.

Howie52
But a gathering of friends - with or without lobster - would have a potential for a fun evening.
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??? Mark I'm sorry but I really don't remember that? I have promised to share any substantial winnings that I might win with my brother and other family members and that pretty well depletes any jackpot I might win? There are a lot of us....

So... if we did have that deal (which I don't remember) I'm sorry but it is over now because I've got a big family and every one of them is expecting a piece of the pie. But I wish you the best of luck. You've got a beautiful family and I know you'll take care of them with your winnings.


Art, it was probably 15 or so years ago. I can't remember if we emailed each other or posted on this board about it.

No worries on the deal. It was only when we said we were each buying a ticket. It was a long time ago.

Fool on,

mazske
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"Art, it was probably 15 or so years ago. I can't remember if we emailed each other or posted on this board about it. No worries on the deal. It was only when we said we were each buying a ticket. It was a long time ago. Fool on, mazske
----------------


I just can't imagine myself agreeing to share or give away 50% of my winnings? I just wouldn't do that. Even with my brother our agreement is only 10%? The IRS would take 37% right off the top which would deplete any winnings significantly. I've got a whole boatload of relatives that I would have to take care of before I shared it with friends. I would always put my family first.

So if I ever did say that, as of this moment in time, that agreement is ended.

Art
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So if I ever did say that, as of this moment in time, that agreement is ended

Lol, sure. We only did it 2-3 times. I remember it as I would walk to a local convenience store to buy a single ticket.

In my 20 plus years of living here, I've only bought maybe 5-10 tickets. I really don't see myself buying anymore though.

Fool on,

mazske
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I'm imagining that when Art sees friendly threads like this about winning the lottery he wriggles with pleasure like a puppy getting his tummy rubbed!



Seattle Pioneer
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"I'm imagining that when Art sees friendly threads like this about winning the lottery he wriggles with pleasure like a puppy getting his tummy rubbed!" - Seattle Pioneer


Haven't been online that much lately. Been busy with family stuff. Got other more important pressing business. Maybe 30 minutes at a time?

Art
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