[Greg (FossilMan)]

Your numbers are off. Reread the article linked in the original post.

The person you're talking about gets 68%, not 60%. That percentage already takes into account the percent owed to the people from his super-satellite final table, and his home club. Thus, instead of 5M, this person ends up with 3.6M.

Now, if you lose a challenge, it is my understanding that is it. You do not need to accept any more challenges, but the person who beat you has to take on the next challenger. Just like boxing. Once you lose, you're not the champion anymore, and it's the new champion who takes on challengers.

If you lose the first challenge, you're out 1M, but that is a loss that you can itemize against your 3.6M winnings, and thus you'll only pay taxes (effectively) on 2.6M. Even better, if you file taxes as an amateur, do not even accept the last 1M of your prize, but have the company hold it as a deposit against your first challenge match. That way, you can argue that you never even won it until you win the first challenge match. If this is an OK tax maneuver, it will save you a lot of money as compared to itemizing the 1M loss.

So, you end up paying about 40% state and federal tax on 2.6M, and finish the whole thing with about 1.5M in the bank.

Of course, for each challenge match you win before losing 1, you get another 0.6M net.

Later, Greg Raymer (FossilMan)