Feeling lucky? Need a billion dollars? The race for the perfect March Madness bracket officially opened today.
The contest, which was announced earlier this year, is now called the Quicken Loans Billion Dollar Bracket Challenge. Yahoo Sports has officially joined the challenge as the official technology provider. As such, the new name of the challenge is the Quicken Loans Billion Dollar Bracket with Yahoo Sports. But almost everybody seems to be calling it the Buffet Brackets in homage to Warren Buffett. Buffett, together with his company, Berkshire Hathaway, dreamed up the idea to give $1 billion to any person who can correctly pick the winners of all 63 games in this year’s NCAA men’s college basketball tournament.
Buffett, of course, is best known for being a billionaire. He ranks 4th on Forbes list of top billionaires with an estimated worth of $58.2 billion. The owner of Quicken Loans, isn’t doing too badly either: that’s fellow billionaire and Cleveland Cavaliers owner Dan Gilbert, listed at #408 of Forbes’ list of billionaires with an estimated net worth of $3.7 billion.
It’s pretty easy to enter the contest and there’s no fee to sign up. In fact, it’s so simple, joked Buffett, throwing in a reference to a Geico commercial, “To quote a commercial from one of my companies, I’d dare say it’s so easy to enter that even a caveman can do it.”
But you do have to register to enter and you only get one chance at a bracket (only one entry per person). You can sign up today at www.QuickenLoansBracket.com.
Registrations will run through Wednesday, March 19. Sign up soon as slots are limited: while it had been previously been announced that the maximum number of entries would be capped at 10 million, that number has been raised to 15 million. After that, you’re out of luck.
I clicked over and registered today: Buffett is right – it is easy – but be sure to read the rules. While I can’t imagine hitting a perfect bracket (the odds of winning have been estimated to be one in 4,294,967,296 or one in 9,223,372,036,854,775,808, depending on who’s calculating), I figure it can’t hurt to try. Besides, Quicken will still award a whopping $100,000 check to each of those with the 20 most accurate “imperfect” brackets.
The winner will receive $1,000,000,000 payable over the course of forty years in equal annual installments of $25 million. The alternative is a one-time payment of $500 million.
As I noted before, there are tax consequences if you win. The folks at Quicken are on it, reminding that participants that “[a]ll federal, state, and local taxes, and all other costs associated with acceptance or use of the Prizes, are the sole responsibility of the Winners.”
Yes, that means the $1 billion will be reported to the Internal Revenue Service and it will happen via a form 1099:
Each Winner will receive an Internal Revenue Service Form 1099 for the amount of the Prize awarded each calendar year and the Prize awards will be reported as required by applicable tax law.
The winner will be notified within fifteen days after the winner determination on April 14, 2014. That means that the tax consequences of winning would apply to the 2014 tax year subjecting the winner to tax – no matter whether it’s a lump sum or an annuity – at a 39.6% tax bracket. For most taxpayers, winnings would be includable on your form 1040 at line 21 as “other income.” That means, unfortunately, there’s no offset and no reduction (though that’s not the case for every taxpayer: you can read about some potential alternatives here).
As noted before, there’s only one way to avoid reporting this income for tax purposes, found in the instructions for the form 1040: “if you refuse to accept a prize, do not include its value in your income.” The folks at the contest anticipated this option and included a line item in the instructions, stating:
Each Winner may waive his/her right to receive a Prize.
But I can’t stress enough how seriously crazy that would be. You should, at the very least, ask your tax professional (or favorite tax blogger) if she – I mean, he or she – wants it. While the contest doesn’t allow you to transfer the winning bracket, there’s nothing that says you can’t gift those winnings to another person. Gifts at that level would certainly be subject to federal gift tax – and gift tax is paid by the person making the gift and not the person receiving the gift – but for all or part of $1 billion, I’m sure you can work something out.
It’s still a billion dollars to start with so complaining about taxes should be done quietly. And you can’t win if you don’t enter. So if you think you might be able to come up with a use or two for a billion dollars, you might want to give it a whirl – but get cracking. I can attest that there are, at most, only 14,999,998 entries remaining (the over 18s in my household have already registered).
After you register, you can start filling in your brackets – and dreaming about your winnings – beginning March 16. You’ll have until March 20 to get those brackets filled in (again, official rules here).
Of course, if you only care about the basketball and not about the dollars, the NCAA tourney starts March 18.