According to
LotteryPost.com the US Tax Court has ruled that lottery winnings are ordinary income, not capital gain. Two Florida lottery winners attempted to keep more of their winnings by claiming their lump sump pay-outs as capital gain. Capital gain is taxed at a much lower rate than ordinary income. The court cited "extensive precedent" and determined that lottery winnings are ordinary income, not capital gain. For more information you can
click here.