Also what would be the best way to distribute the money to family with the least amount of tax penalties?
2007-10-23 01:39:19 · 2 answers · asked by Jason 1 in Business & Finance ➔ Taxes ➔ United States
There's really no way to limit the taxes on the win. This is fully taxable as ordinary income. The Federal tax will be about $5.25 million, plus any state taxes.
Giving it away to friends and family will NOT reduce your tax liability and can actually increase it if you give too much to any one person as Gift Taxes will kick in. You can give a maximum of $12,000 per year per recipient to an unlimited number of recipients without having to file a Gift Tax return. Any more than that to any one recipient (other than your spouse) will go against your lifetime $1 million exclusion amount and once that's used up you'll owe taxes at about 46% on any excess gifts.
2007-10-23 02:33:50 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Give the money away to the first person who answers the question, you would pay lower taxes. :)
2007-10-23 08:46:54 · answer #2 · answered by Cyn 2 · 0⤊ 1⤋