Hello gentlemen. I have a tax question for you big net winners... for someone who might win hundreds of thousands in net profits per year or something like $2.8-million over six years.
Let's use $2.8-million over six years, okay?
2,800,000 ÷ 6 = $466,666 per year
You certainly can buy something big with that! But what is the tax rate if a NET PROFIT?
Is it 28% ? To be honest, I don't know. But if it is a 28% tax rate then after federal tax the net amount is $336,000 per year.
And over 6 years that net amount would be
$336,000 X 6 = $2,016,000
That's still a lot of money, but how would you spend it?
Gambling doesn't sound like an income stream you can depend on.
You wouldn't buy, say, a $1.5-million dollar home the first year you had a net of $336,000 would you?
And if someone said they spent three quarters of their winnings on a depreciating asset such as a boat or a plane or an RV that wouldn't be wise, would it?
Consider also the loan interest on a $1.5-million purchase in year one, when it takes six years to have a net win of just over $2-million?
Well, dream on, I say. It's a nice dream. Or fantasy.