Making New Friends at the IRS

My family has never been what could be termed, lucky, at games of chance or, for that matter, taking a chance.


For example, my grandfather took Germany and 7 points in World War II and my father passed on an opportunity to acquire 500 acres of desert property in the mid-1950s claiming “no one would ever want to live in this place.”


“This place” as it turned out, was Scottsdale, Arizona,
and that acreage he passed on today is worth roughly the GNP of a small Central American nation. Years later, he also eschewed an opportunity to purchase a parking garage on the west side of Manhattan, deeming the location “too seedy.” Apparently it was not seedy enough to stop developers from erecting Madison Square Garden there just two years later.


So as you can imagine, it came as little surprise that I did not share in the largesse of last week’s colossal $656 million Mega Millions lottery jackpot, although according to reports, three winning tickets were sold in Maryland, Illinois and Kansas.


Now the winners who as of this writing, have not been identified, are going to be making all sorts of new acquaintances. There will be dozens of eager financial planners and investment opportunities galore, distant relatives, who suddenly will become not-so-distant, countless calls beginning at 7:30 am from various non-profits explaining how it’s incumbent upon sudden millionaires to give back to the community.


But of all the new friends – welcome or otherwise- who suddenly appear at the doorsteps of those respective winners, there’s one they have to willingly accommodate.


That would be the Welcome Wagon to the nouveau riche known as the IRS, which will leave with roughly 25 percent of the winnings, the amount subject to federal withholding. And of course, that doesn’t include applicable state income taxes.


If the winners take a lump sum payment as a number of investment professionals have advised, the after- tax sum would be just over $105 million. Still all things considered, not a bad return on an investment.


In addition to the trio of winning ducats, three other ticket winners are entitled to claim $1 million for picking the correct Mega Ball number, and some 158 lotto players will receive $250,000 apiece for picking five out of six correct numbers.


All of whom should also expect to expand their rolodexes by one.


As for me, I’ll maintain my twice weekly purchases of lottery tickets in hopes of someday landing the whale, but I draw the line at a recent call offering me to get in on the ground floor of reselling flat-screen TVs in Ecuador.