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.

In both cases, petitioners in the cases won the lottery and reported the annual installment payments as ordinary income for a number of years. Eventually, however, the petitioners sold the right to their remaining installment payments and claimed that the resulting gain (a lump payment) was reportable as capital gain, rather than ordinary income.

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