Describe tax treatment of property dispositions if a one of the firm's clients won $50,000,000 in the Power Ball drawing. The award only allows for receipt over a 20 year period of time. A settlement company has offered the client a current lump sum payment of $26,000,000. The client would like to know the tax implications of each option. One of her specific questions is whether the right to the lottery payout is a capital asset for purpose of applying the capital gain tax.

IRS code Sec, 64

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ordinary income defined.

For purposes of this subtitle, the term ordinary income includes any gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b) . Any gain from the sale or exchange of property which is treated or considered, under other provisions of this subtitle, as ordinary income shall be treated as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b) ."