The Tax Court reaffirmed that proceeds from the sale of a right to future annual lottery payments constitutes ordinary income, not capital gain, after reviewing two test cases involving winners of the Florida State Lottery.
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Tax Court Reaffirms Lottery Payments are 'Ordinary Income'
Nov 9, 2006, 7:39 am (2 comments)
After investing in the Lottery for 20 years, you'd think that a Jackpot Win should be considered Long Term Capital Gains! LOL!
Well after thinking about this I would have to agree with the tax courts. Why should people that take the annuity and then sell it get special treatment compared to all other lottery winners. I mean if you take the lump sum you have to pay 35% of most of the income. If they have to, then should everyone else no matter what way you decided to take it. If this were the case then everyone would take the annuity, sell it right away and get away with paying only 15% in taxes on it. Now that would be a major loophole.
B-rad