<p>I read that the guy who won the $232mm took a lump sum payment of $88.5mm after taxes. Why so little? I just checked and SD has NO state income tax. I don’t think federal income taxes have reached 62% have they? Any ideas? Was there a present value calculation? If so, the $232mm was not really $232mm. Nice chunk of change, but not 1/4 bil.</p>
<p>I think you only win the advertised amount if you take it over the course of x amount of years (20 or 30 or something). If you choose the lump sum option, it’s less that whatever the jackpot was in the first place, and then with taxes, it probably got down to $88.5 mil. Not as much as it could have been, but he’s probably pretty satisfied! </p>
<p>Someone correct me if I’m wrong?</p>
<p>o.k. You only get 232 million if you take the 26 years payout option. If you take the cash option, like this winner did, you get less than 2/3 of that. Then the tax.</p>
<p>So, the winner get about 1/3 of advertised big number if he/she takes the cash option. </p>
<p>Still lot of $$.</p>
<p>I have heard the same^^. The lump sum is discounted giving a present day value, compared to taking a payment over time (kind of like your pension would be if you took a lump sum). And then there are taxes.</p>
<p>Lottery’s always quote the extended payment amount to entice more people to bet. The strategy preys primarily on the poor and uneducated who buy more than their share of lottery tickets. </p>
<p>A lottery is a voluntary tax that is paid by those that do not understand basic arithmetic.</p>
<p>the lottery is an annunity. If the lottery is $232mm, you win and take the lump sum cash, you are taking the amount of money that has to be invested today that will yeild 232mm over the course of 30 years of payments</p>
<p>Person took the lump sum after taxes which netted him/her 88.5 million after taxes. While it may not be $232 million I think I could manage to get by very nicely on that amount of money;)</p>
<p>[Net</a> present value - Wikipedia, the free encyclopedia](<a href=“http://en.wikipedia.org/wiki/Net_present_value]Net”>Net present value - Wikipedia)</p>
<p>thanks, BC Eagle, I was having a brain freeze and could not remember the second part (NPV).</p>
<p>How will he possibly get by? :)</p>
<p>LOL, MOWC. Lets hope he doesnt invest it all in the next Lehman Bros.</p>
<p>Remember, it’s more like $110-120M net present value before federal taxes.</p>
<p>The general rule of thumb to get a “quick and dirty” but fairly accurate estimate of the net after taxes is to multiply the total amount X 40% . It will vary state to state, depending on the rate of state tax.</p>
<p>The one-time cash payout for the $232.1 million prize is $118,005,530</p>
<p>[Powerball</a> - Home Page](<a href=“http://www.powerball.com%5DPowerball”>http://www.powerball.com)</p>
<p>The Federal Withholding rate is 25%. So, 25% of $118 million is $29.5 million, netting him $88.5 million.</p>
<p>Note: His actual Federal Tax rate will probably be higher than 25% (35% for taxable income above $372,950), so he will owe a lot of taxes soon come April 15 of next year.</p>
<p>jym626–</p>
<p>He could probably make a lot more money if he’d take his money and help some of those folks transfer money into the USA from Nigeria. </p>
<p>Seems like easy money to me. ANY thoughts?</p>