Every so often, I Google my name just see where I show up in the Page Rank. Interestingly enough, Oracle’s site still has me listed as a Grand Prize Winner of their Space Sweepstakes. For those of you who I haven’t told yet, this is no longer the case. Back in early January, after I calculated a first-pass on my yearly taxes, I initiated the process of prize forfeiture with Oracle. As of early March, I am officially no longer going to space.
It’s not a terribly long story, so I figured I’d take the time to write it out and have some sort of documented closure on the whole thing. It must be real if it’s on the web, right?
Last year ended in stark contrast to how this one began. By December of 2005, I’d just finished up a podcast for OTN, I’d done a couple of interviews with a few tech media outlets and had been brought up on stage during Open World for a few brief moments of dancing with the Big Wigs. When January of 2006 rolled around, Marden-Kane (the company Oracle had been working with on the sweepstakes) mailed the 1099-MISC form for the approximate retail value of the prize, which is precisely the moment when things went for a toss.
It should be noted that in all of the past 10 years I’ve done my own taxes, I’ve usually completed the paperwork and filed within a day of receiving all the appropriate documents. I have no children, do not own a home (can’t afford one in the SF area), I’m not blind, do not own an electric or hybrid car, and usually have very small capital gains/losses from stock sales. The federal government loves me, really, because other than the previous years’ state tax, I basically can’t itemize anything, and I have essentially no additional deductions that I can claim. The disturbing visual of Uncle Sam raping my wallet comes to mind. Anyway…
So, when that 1099-MISC (Box 3) showed up for the value of the prize and I plugged all the appropriate values into TurboTax, I knew I had major problems. Oracle and M-K thoughtfully included $35,000 on top of the space trip itself in order to assist in the overall tax burden. As it turned out, the additional cash ended up being only slightly more than half of the actual tax burden I was being asked to pay. Before I included the value of the prize, I owed about $150 total to both the Federal government and State of California. The addition of $138,000 (ARV of the prize) on top of my regular taxes exponentiated that $150 to something slightly over $60,000 owed in total, leaving me about $20-25,000 in the hole.
Long story short, after some strenuous hand-wringing and lots of talking with the family Tax Attorney, the only option to entertain was forfeiture of the prize. Marni and I were married this year and we essentially paid for it all ourselves, and eventually we would like to purchase a house. Going $25,000 into the hole on the promise that I might, at some distant point in the future, be able to fulfill a childhood (okay, adult) fantasy when weighed against the immediate realities of my life didn’t seem like Good Math to me. I had expected to pay some additional tax, like say $5,000, but not $25,000.
So, shortly after I discovered this I contacted Oracle and began the process of forfeiture. They were shocked, obviously, but very gracious about the whole thing. Oracle and M-K did make a few attempts to see if there was a way to ameliorate the issue, but in the end all the options led to forfeiture. There was a brief discussion of shifting the taxable amount around over a couple years or even a prize of cash-value instead, but the first option was killed by me due to the speculative nature of the deferrment, and the second option was killed by an Oracle VP.
I had a talk with one of the representatives of M-K, and he basically said that when they usually setup these types of sweepstakes they either pay the winners tax bill for the year of the win, or include enough cash on top the prize to cover a 30% tax burden ($35,000, in the case of this prize). This last part is interesting because in the case where your average minimum wage worker wins something like this, 30% is probably sufficient to cover most of the tax. Your average software engineer, however, probably doesn’t fall into that bracket specifically because even the lowest paid software engineers tend to make more than your average salaried American worker. My burden, had I paid it, was closer to 40%.
This was probably one of the toughest decisions I’d made in my life so far. Turning down the ability to realize a childhood dream when it’s so f@!*ing close you can touch it is really impossible to put into words. At the same time, it’s hard to really feel mad or blame anyone involved. The forfeiture ended sadly but amicably, but there was never any malice or ill intent involved.
I’d be lying if I said I wasn’t a little upset that Oracle and M-K had done a little more research up front about the type of person they were marketing the prize toward and adjusted their assumptions and math accordingly, but in the end there really isn’t any point in stewing on any of this. Hell, I could have done a little more due dilligence about how the prize was going to effect my financial situation, but it’s not really foremost in your mind when something like this is dropped in your lap. Anyway, it is what it is. Over and done.
I was, however briefly, a potential astronaut.