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Sunday, March 18, 2007

Busy day, but for whom?

Somebody bought that monster Powerball ticket in nearby Milwaukie, Oregon. What do you think their Monday agenda looks like?

See lawyer first thing in the morning, followed by accountant. Unless some really awkward paperwork is involved in the tax planning, head down to Salem in the afternoon. Maybe stop at the bank first -- let them know the big deposit is coming. Call the travel agent. By Thursday, be out of here for a good, long while.

Comments (11)

It's just arithmetic, but it's entertaining to contemplate the choice between the 30-year annuity and the lump-sum payout. Federal taxes probably are not going to be any lower than they are now; but this could be a good time for a retroactive move to Vancouver.

Since you have a choice (made after you've already won) to take either the lump sum or the annuity, I would think that you would be taxed (via the doctrine of "constructive receipt") on the lump sum as soon as you win, even if you take the annuity. If that's true, it's too late to move to the 'Couv.

And query, even if you lived in the 'Couv, whether Oregon would consider it Oregon-source income since the winner purchased the ticket in Oregon.

Interesting point about Oregon source income.
At one time Oregon attempted to levy income taxes on railroad employees, for that portion of the wages they earned, while the train that they were working on was in Oregon.

Maybe it's just me, but it's hard to imagine that I'd give a crap about the magnitude of the tax losses. Even if taxes took 80% of $180 million in paper winnings, I like to think I'd be content with the $36 million I took home.

Gift horses, ya know.

Yeah, but, after taxes, your gift horse might be lame.

The tax question is interesting in terms of how big a jackpot you'd have to win in order to quit working and live a life of luxury. Certainly $182 million qualifies, but what about a regular old Megabucks jackpot?

According to the Oregonian, the $182 million equates to an $88 million lump sum (and I have to assume that's before taxes, because I think lump sum payouts are generally less than 50% of the total). So total after taxes (35% federal plus 9% state) is right about $50 million, or about 27.5% of the total jackpot.

If those figures are anywhere close to accurate, a $2 million Megabucks jackpot would equate to $550,000 into the bank account at the end of the day. That would be great, but is it enough to fundamentally change your life? I'm not even sure it would buy a nice condo in the Pearl.

$4M pre-tax per year (the annuity option) would pay the rent, at least for the next few years. Jack's point on constructive receipt above notwithstanding, I'm guessing the lottery folks have found a way (as the pension folks do) to give the lump-sum choice without triggering constructive receipt. Surely they want their winners to take the yearly payments so that they can keep the Ponzi thing going for a while.

"Yeah, but, after taxes, your gift horse might be lame."

If $36 million represents a lame horse, then I guess what I have now is basically a quadriplegic mouse.


Against my better judgement, I'll refrain from any comment on your pets.

Well today they finally announced the winner.

Gannon, who learned the news Sunday morning, said he plans to travel.

"We have children all over the United States, and I've been interested in going to Ireland," he said in an Oregon Lottery news release.

It's not clear if he plans to quit his job at PGE, where he has worked for 35 years.

Not To Be Overlooked: This guy bought the winning ticket on St. Patrick's Day.

Also Not To Be Overlooked: He's going to travel to Ireland.

Surely they want their winners to take the yearly payments so that they can keep the Ponzi thing going for a while.

I doubt that the Lottery folks would maintain continuing primary responsibility under the annuity option (if anyone takes it). I suspect that they would take the $88 million lump sum and go right out and buy a 30-year annuity from an insurance company, for the benefit of the winner. Perhaps for tax reasons, they keep the policy in Lottery's name, but I strongly doubt that they play Ponzi.

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