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One man’s trash is another man’s treasure
By Mr. Stupid | April 9, 2008
True story. Back in the mid-90’s, when I worked at a financial services company, I worked with two lottery winners. No, they didn’t win by flipping coins. They did it the old fashioned way. They got lucky.
I think of these guys every time I go into a convenience store. Inevitably, there’s an overflowing barrel of trash by the door, mostly made up of discarded lottery tickets.
The first guy was a big winner. He had won a million dollars a year or two before I met him. He took the annual payout, so after taxes, he was netting about $20,000 per year. I was only making $36,000 per year at the time so I asked him why he was still working. He shrugged and told me he was supporting most of his family, too, so he still had to work. Fair enough.
The other guy won $100,000 in the lottery. I think it was Megabuck’s second place prize at the time. He won it with 9 other people that each put in $10 every week to buy 100 tickets. When they won, each person got $10,000.
I remember telling him that was cool, but asked him who was going to pay the taxes on the winnings. He told me that after the group won, they set up a corporation of some kind, and each person got $10,000 from the corporation.
But then he told me that he didn’t pay taxes on any of his winnings.
Huh?
Turns out, you can deduct gambling expenses against winnings. This includes scratch tickets and other ticket stubs that you had bought during that year.
What this guy did was hang around outside of convenience stores and collect losing tickets that people threw away. He told me that he collected $10,000 worth of losing tickets so he was able to write off all of his winnings. All he had to do was keep those losing tickets for, I guess, 7 years or so, to ensure that he could defend the write-offs in case he got audited.
Genius? You bet.
Stupid? With a capital “S”.
Shady? Sure. But I guess the statute of limitations is up so I can blog about it now. Plus I don’t even remember his name. I just remember that he was one slick mutha. And knowing him, he probably spent about that much on lottery-related shit anyway.
One man’s trash is another man’s treasure, I guess.
Topics: hacks |
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April 9th, 2008 at 3:26 pm
In Preparing for the CPA Exam, I had a professor tell a story about how people would go to racetracks and collect all the losing slips of paper that people threw on the floor. There was some sort of famous case where someone was caught doing this because the tickets showed signs of shoe-marks on them, and the losses were disallowed.
April 18th, 2008 at 2:44 pm
Oh my gosh, my uncle did this too!!! Of course, he only won a couple thousand, but I remember as a kid going over to their house and seeing a huge box full of tickets. We were told that if we ever saw one on the floor to pick it up for him…mind you, I was 6 or so. Hahah…so this is illegal? Ooops…