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"If a state lottery prize is payable in installments, you must include the annual payments and any amount designated as interest on the unpaid installments in income as received. If you elect to receive payment of a state lottery prize in a lump sum, you must include the entire lump sum in income in the year received. "

Is this capital gain or ordinary income? Do you have any references for the above quote?


I remember the thread and this board came to the conclusion that accelerating the annual payment stream into one year would not result in favorable capital gain treatment. We concluded that the nature of the income never changed - just the timing of when it was received.

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