US Mega Millions Lottery Jackpot reaches $500 Million

[KnightExemplar]

Is there a limit on charitable tax deductions?

I'm not rich enough to care about these sorts of details. But I know of a few of them. I know that no matter how many deductions you have, you cannot escape the alternative minimum tax. (outside of the current 15% rate on long-term capital gains, which isn't taxed as income)

http://en.wikipedia.org/wiki/Alternative_Minimum_Tax

Woops, I was wrong. Charitable donations appear to work against the AMT. Well, when I become a millionare, I'll keep that in mind

So the answer to your question is: I'm not rich enough to know or care about it. And tax law is complicated...

[kiklion]

Is there a limit on charitable tax deductions?

I'm not rich enough to care about these sorts of details. But I know of a few of them. I know that no matter how many deductions you have, you cannot escape the alternative minimum tax. (outside of the current 15% rate on long-term capital gains, which isn't taxed as income)

http://en.wikipedia.org/wiki/Alternative_Minimum_Tax

Woops, I was wrong. Charitable donations appear to work against the AMT. Well, when I become a millionare, I'll keep that in mind

So the answer to your question is: I'm not rich enough to know or care about it. And tax law is complicated...

There are a few exceptions, but if you are giving cash it is 50% of you AGI (Adjusted Gross Income).

http://www.irs.gov/publications/p526/ar ... 1000229802

Adacore your study was only on winners of up to $150,000. I can easily see someone blowing through that like nothing. New cars, new home, new lifestyle, it's all gone. But I'd be very surprised if the stats are similar for people who won a few million, much less $500M. It seems nearly impossible to waste all of that money.

Well if you go lump-sum and get taxed, you're down to like $260 M already. If you are a guy who likes to give money away to charity, you can blow away your entire earnings by giving away "half" of your jackpot. Ex: You take the lump sum (down to $390M) and then give away $250 M. Then you get taxed ~$140M and you're left with nothing!

If you don't know how taxes work, you can easily give away too much thinking you have a lot left over.

Isn't it impossible to be left with 'Nothing', $0, due to charitable contributions (so long as they are not more than 50% of your AGI)?

$360 million is the lump sum number, donate $180 million, pay 45% taxes on $180 million ,left with about $100 million left.

[Роберт]

Adacore your study was only on winners of up to $150,000. I can easily see someone blowing through that like nothing. New cars, new home, new lifestyle, it's all gone. But I'd be very surprised if the stats are similar for people who won a few million, much less $500M. It seems nearly impossible to waste all of that money.

I was talking about Panonadin lots of mini-sweepstakes idea. Which would presumably be significantly less than $500 million each.

[Panonadin]

Adacore your study was only on winners of up to $150,000. I can easily see someone blowing through that like nothing. New cars, new home, new lifestyle, it's all gone. But I'd be very surprised if the stats are similar for people who won a few million, much less $500M. It seems nearly impossible to waste all of that money.

I was talking about Panonadin lots of mini-sweepstakes idea. Which would presumably be significantly less than $500 million each.

I was thinking more along the lines of 25k.

Some people just need help and wont end up in a shit hole if they got it. Yeah they could work at it for 20 years and possibly end up in the same spot, or they could spend their entire life working just trying to get there. Some people get behind and just need a hand.

Thats who I would aim for. Sure it would probably miss 90% of the time, but IMHO that 10% would be well worth it if you had 500 Million of your own to throw around.

[Роберт]

Some people just need help and wont end up in a shit hole if they got it. Yeah they could work at it for 20 years and possibly end up in the same spot, or they could spend their entire life working just trying to get there. Some people get behind and just need a hand.

Thats who I would aim for. Sure it would probably miss 90% of the time, but IMHO that 10% would be well worth it if you had 500 Million of your own to throw around.

Actually, your idea might work. I'm just VERY suspicious of any "through money at it and it will fix things".

Sure I could give a homeless person basically any amount of cash I wanted to. Would it help? Maybe. I guess that's where your idea of research who to give the money to comes into play.

[Adacore]

I can't find an an accurate source for what proportion of the ticket cost goes into the jackpot, but the previous prize was 363 million and the new prize is estimated at 640 million. That means a minimum of 300 million tickets have been sold for this draw (at 1 dollar each), and presumably something more like double that - I figure half the ticket cost going to jackpot is a reasonable assumption. If I'm doing the calculation correctly (and I might not be because I've always been horrible at probabilities), and assuming that all numbers selected for tickets are random, that means the chances of somebody winning are at least 80%, probably actually over 95%. Assuming 600 million tickets sold since the last draw, it would be ~96.7%.

With most lotteries, the chances of sharing the jackpot if you win are essentially the same as the chances of someone winning, so the chance you'll have to share it is also probably around 96.7%. With that probability, if you won, the chance you'd have to share your winnings with 20 or more people is actually over 50%. That's highly significant when calculating the expected value of a ticket - most people seem to be assuming that you'd be a single winner and get the full jackpot, in which case the expected value is higher than the ticket cost, but that doesn't take into account the overwhelmingly high chance that a jackpot this large will be split.

I suspect the function of the amount people spend on lottery tickets, and hence the number of tickets purchased, relative to the jackpot value is such that the expected value never goes above 1 - the chance of the jackpot being split enough to decrease it to less than $176M is always going to be more than the chance of a single ticket winning it.

[sourmìlk]

I like how buying all the possible lottery numbers would cost less than winning would pay, even in a lump sum. The worry, of course, is that you'd have to split it with other people.

[buddy431]

There were three winners last night, from Illinois, Kansas, and Maryland (and I wasn't one of them ).

[CorruptUser]

You can reduce the odds of sharing the jackpot by not picking numbers 1-12; since many people use birthdays as the numbers, those numbers will be used by more people than other numbers. Also, the chance of winning with one ticket is not independent of winning with another ticket; given that numbers A B C D E are not the winning combination, there is less chance of A B C D F winning than F G H I J. So if buying multiple tickets try to avoid repeat numbers.

[yoni45]

You can reduce the odds of sharing the jackpot by not picking numbers 1-12; since many people use birthdays as the numbers, those numbers will be used by more people than other numbers.

Except if the jackpot has the numbers 1-12 in it, you're also reducing the odds of winning... ^_^

Although that's an interesting concept -- if it's a crapshoot anyway, I guess may as well aim to luck out with less sharing...

given that numbers A B C D E are not the winning combination, there is less chance of A B C D F winning than F G H I J. So if buying multiple tickets try to avoid repeat numbers.

Er? I'm pretty sure this doesn't follow. If ABCDE is not a winning combination, that says nothing about the odds of ABCDF, BCDEF, or w/e being a winning combination. And each of those is still as likely to be a winning combination as FGHIJ. By "winning" i assume you're referring to the jackpot, not just any prize? I feel like that doesn't hold either way, but if lesser prizes count there might be something to that...

[lutzj]

Yeah, I'm pretty sure your odds are just as good when buying ABCDE and ABCDF as when you buy ABCDE and FGHIJ, since the sequences of numbers are all unique and have an equal chance to pop up.

[Tirian]

Yeah, I'm pretty sure your odds are just as good when buying ABCDE and ABCDF as when you buy ABCDE and FGHIJ, since the sequences of numbers are all unique and have an equal chance to pop up.

There are two separate but related issues. Yes, 1-2-3-4-5-6 is as likely to be a winning draw as 5-9-15-31-37-46. But if you pick 1-2-3-4-5-6 and win, you have to split the jackpot with everyone else who picked their numbers with the exact same mindset. I recall back twenty years ago when I analyzed the California lottery and they actually published a brochure showing how many people filled in their tickets with different highly ordered geometric patterns. I don't recall the exact numbers, but it was on the order of splitting a jackpot hundreds of ways whereas a person who chose their numbers randomly (or had the computer pick their numbers for them) were likely to be the sole winner for most drawings.

There is a school of thought that you can do better yet by overcompensating for the bias of your competitors. For instance, if you chose eight random numbers between 1 and 56 and used the highest six, you're remaining very likely to have a unique ticket while still making it very likely that you don't have the same numbers as the potentially large communities who play "lucky" numbers the the birthdays of family members. I don't keep up with the scholarship, but a mathematician interviewed by NPR a few days ago indicated that this sort of strategy had value.

[CorruptUser]

Yeah, I'm pretty sure your odds are just as good when buying ABCDE and ABCDF as when you buy ABCDE and FGHIJ, since the sequences of numbers are all unique and have an equal chance to pop up.

Let's say there are 2 letters drawn from 4, A B C and D.

The possible combinations are

AB
AC
AD
BC
BD
CD

Or 6 possibilities.

All letters have a 3/6 chance of being on the winning ticket.

You buy ticket AB. It is not the winning ticket.

The possibilities are now

AC
AD
BC
BD
CD

Given this, A has only a 2/5 chance of being on the winning ticket, as does B. But C has a 3/5 chance, as does D. Wait, this can't be right. Looks like a paradox. CD has just as much chance of winning as AC, given AB doesn't win. Hmm. The winning ticket might have only a 2/5 chance of having A, but there are 2 ways to have A on the ticket, while 3 ways for C, so the odds all come out to be 1/5. Yeah, assuming that you must get all 5 numbers to win (no prize for 4 out of 5), knowing something about the losing ticket doesn't tell you anything about which one will be the winning ticket.

[Tirian]

I love Google News. These are the stories we should hear about more often.

Man buys Mega Millions ticket, gets struck by lightning a few hours later.

(Yes, I know. I found five substantially different reports on this story with different quotes in each one. If it's an April Fool's Day gag, it was highly over-engineered.)

[rigwarl]

Looks like a paradox.

Not a paradox, just math

http://en.wikipedia.org/wiki/Bayes%27_theorem

[CorruptUser]

Looks like a paradox.

Not a paradox, just math

http://en.wikipedia.org/wiki/Bayes%27_theorem

Yes, I know all about Bayes and his hideous sister and brother-in-law Buhlmann-Straub. Seriously, credibility theory would be much simpler without them.

[nomadiq]

Yeah, I'm pretty sure your odds are just as good when buying ABCDE and ABCDF as when you buy ABCDE and FGHIJ, since the sequences of numbers are all unique and have an equal chance to pop up.

Let's say there are 2 letters drawn from 4, A B C and D.

The possible combinations are

AB
AC
AD
BC
BD
CD

Or 6 possibilities.

All letters have a 3/6 chance of being on the winning ticket.

You buy ticket AB. It is not the winning ticket.

The possibilities are now

AC
AD
BC
BD
CD

Given this, A has only a 2/5 chance of being on the winning ticket, as does B. But C has a 3/5 chance, as does D. Wait, this can't be right. Looks like a paradox. CD has just as much chance of winning as AC, given AB doesn't win. Hmm. The winning ticket might have only a 2/5 chance of having A, but there are 2 ways to have A on the ticket, while 3 ways for C, so the odds all come out to be 1/5. Yeah, assuming that you must get all 5 numbers to win (no prize for 4 out of 5), knowing something about the losing ticket doesn't tell you anything about which one will be the winning ticket.

Is this argument similar to the Monty Hall Problem? If so, what you are saying does not really apply. After you find AB is not a winning ticket you don't get to discard it and only consider the probability of the options remaining. The lottery does not work this way.

To reflect on your argument, lets consider that we find that AB was not the winning combination. If you had bought ticket CD as well, you would argue that its probability of winning would go up. While this is true after you find out AB is not the winner, you don't know this before the draw. With the lottery you never have partial information. You have 'before the draw' and 'after the draw'. Before the draw, all combinations are equally likely. After the draw, only one combination is possible, with probability 1.0.

I have a few more questions in my own mind about this and other lottery related questions which I might post in the Mathematics forum. If you find this as interesting as I do, keep an eye out there.