Beast Games winner Jeffrey Randall Allen has revealed the 'ingenious' loophole he could use to keep more of his $10,000,000 winnings, as he's currently set to lose a significant chunk of that to taxes.
Jimmy "MrBeast" Donaldson has reportedly given away around $20,000,000 to contestants throughout the events of Beast Games, as the 1,000 players completed a number of gruelling challenges in search of the ultimate cash prize at the end.
There was only to be one winner though, and that ended up being Player 831, otherwise known as Jeffrey Randall Allen, who picked out the right briefcase at the end to score an easy $10,000,000.
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It turns out that he won't actually get to keep a large part of those hard-earned winnings thanks to taxes though, but he's outlined a loophole that he could take advantage of to potentially save himself millions.
Discussing his time on the show on The Iced Coffee Hour podcast, Allen outlined his frustration after finding out he'd have to part way with $5,000,000 of his winnings due to California state taxes.
"It's not fun, well especially like in today's day and age where you kind of see where some of our tax dollars are being spent it's like ugh, man I could put it to better use," Allen complained.
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He's revealed that he could minimize his tax burden through "charitable deductions or setting up a donor advice fund to be able to continue to fund research in the years ahead," there are a couple of better options if he's wanting to extract the maximum value from his Beast Games victory funds.
Iced Coffee co-host Graham Stephan points out: "I don't know if you could do this, because California might want to call this a California-sourced income, they can be strict about this, but potentially looking into setting up a corporation in another state with no state income tax.
"Delaware I think is pretty popular, Nevada is pretty popular too. Setting up a corporation so that the money goes to the corporation and the corporation pays, I think it's a flat 20% income tax on that. But then the corporation could then disperse the money as needed, and then you're not taking the money personally and it belongs to the corporation, and it could be used to fund research or other certain things.
"So now you're only paying 20%, $2,000,000 in tax, which is a lot versus $5,000,000."
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As he says, that might be a bit complicated on the legal side of things as the money was technically earned by Allen who is a California resident, but it could save him upwards of $3,000,000, which is nothing to scoff at.
"Graham, you're hired," Allen jokingly responded, adding seriously that "these are awesome ideas" and that he's been opened up to opportunities that allow him to "preserve and grow your wealth" following his Beast Games victory.
Another perhaps slightly more convoluted route he could go down is having his wife register as a real estate agent, and then use cost segregation analysis to take paper losses against a $10 million property that he could, for example, have put $2 million down on.
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Allen would then be able to depreciate $8 million from that property, which would in turn save him around $2 million to $2.5 million in taxes, as explained once again by Stephan.
What's clear though is that while Allen will almost definitely have to still part with millions of dollars in tax, there are plenty of 'loopholes' that he can use to save lots of money, which could be beneficial when searching for a cure for his son's rare Creatine Transporter Deficiency disorder.