$315M Powerball Winner is now broke

mickeyd said:
Maybe they (Powerball folks) should make you pass a test in money management before they allow you to take it as one payment. This guy surely is the poster child for annuitization.
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They already have a test! You have to fill in 6 multiple choice answers on a scan sheet and submit it at the nearest gas station along with a $1 processing fee. I've tried taking this test on occasion and I never seem to pass it... :'(
 
sounds like a ploy. He's probably got it all stashed somewhere.
 
That's what I think. He's claimed "thieves" stole all his money to hide it from the lawsuits.

What a mess!

Audrey
 
Wow, wasted $113 million in 4 years.
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I could NEVER spend that much money in 4 years. I'd sure like the chance to TRY, though! :LOL:

Since I don't pay the "California stupidity tax," however, I guess I'll never know.
 
The problem is: people who actually know how to manage their money, don't play the lottery. Therefore, the vast majority of players are financially illiterate, and from that pool you get a few winners. Enter the media, who's happy to do some schadenfreude reporting.
 
I don't know which is worse, spending 113 million in 4 years or paying 202 million in income taxes :eek: :eek: Holy smokes!
 
This is actually pretty common. It's just that this guy won the biggest single drawing ever. I'd bet there are several stories like this dotted all over the country.

We had some neighbors win 100k on the lottery back in the 90's...they have nothing to show for it now.

As soupxcan said, "people who actually know how to manage thier money, don't play the lottery".

I remember reading somewhere that like 15% of people surveyed beleive that the only way they will be able to retire comfortablely is by winning the lottery. That's pretty pathetic :(

-Warthog
 
cube_rat said:
I don't know which is worse, spending 113 million in 4 years or paying 202 million in income taxes :eek: :eek: Holy smokes!
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I managed a big smile while writing six figure checks to the IRS and high five figure ones to the CA FTB.
 
cube_rat said:
I don't know which is worse, spending 113 million in 4 years or paying 202 million in income taxes :eek: :eek: Holy smokes!
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He didn't.

When you win powerball or Mega millions and you take the lump sum, you only get half of the listed jackpot.

FYI: My firm did work for a winner, I DO NOT play.
 
cube_rat said:
I don't know which is worse, spending 113 million in 4 years or paying 202 million in income taxes :eek: :eek: Holy smokes!
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Well, if you elect the lumpsum distribution, doesn't the jackpot amount get cut in half? So I think he actually paid "only" 44.5 million (315 / 2 - 113), which works out to be around 28%. That does seem to be a pretty low tax rate for such a large income.
 
WanderALot said:
Well, if you elect the lumpsum distribution, doesn't the jackpot amount get cut in half? So I think he actually paid "only" 44.5 million (315 / 2 - 113), which works out to be around 28%. That does seem to be a pretty low tax rate for such a large income.
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Top income tax rate of 35% + state. He probably paid somewhere between 40-45% in taxes.

The "lump sum" discount isn't necessarily 50%. They pay you the present value of the prize ($315MM in this case) using some unknown (to me) discount rate.
 
Sounds like the guy was/is a boozer and gambler.....2 things when done together can be a disaster!
 
3 Yrs to Go said:
Top income tax rate of 35% + state. He probably paid somewhere between 40-45% in taxes.

The "lump sum" discount isn't necessarily 50%. They pay you the present value of the prize ($315MM in this case) using some unknown (to me) discount rate.
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I think they just get a quote on what current value they would need to buy an annuity payout equal to 315MM over 25 years (or however long the annual payout option is).

Donzo said:
Sounds like the guy was/is a boozer and gambler.....2 things when done together can be a disaster!
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Yes, but think of the economic boom in his area for barmaids, pole dancers and bookies. I bet they love the lottery.
 
Here is a case where taking the annual payouts would definitly been better. The recepient would have had at least 20 years of expenses.
 
Until he was sought out by one of the companies that 'buys' your future annual payouts with an immediate lump sum...
 
Cute 'n Fuzzy Bunny said:
Until he was sought out by one of the companies that 'buys' your future annual payouts with an immediate lump sum...
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...which he could have then re-annuitized...

:eek: :LOL:
 
Rough estimate:

Jack Pot: 315,000,000
Annuity Payment (over 30 years): 10,500,000
AAA-rated general obligation bond yield (10 yr Treasury): 5.20%
Period: 30

Present value: $157,795,126.06
25% Federal Tax: $39,448,781.52
Virginia: 4% State Tax: $6,311,805.04
Payout after tax: $112,034,539.50 (not exactly $113M).
 
And this guy was actually a millionaire businessman before he played the Powerball.

The claim for being broke is suspicious. His bank said something like they are investigating small discrepancies. In other words the amount claimed to have been stolen is very small.
 
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