Bruce Wilson won $3 million in the state lottery. The lottery pays out the prize

Question

Bruce Wilson won $3 million in the state lottery.

The lottery pays out the prize money in 20 annual installments of $150,000 each.  

After receiving three $150,000 installments,

Bruce sold the remaining $2.550 million of payments for $1.5 million, reported the $1.5 million as long-term capital gain on his tax return, and paid tax on that amount at the 20% tax rate (long- term capital gain rate).

Bruce's tax return has been selected for audit by the IRS.  

Is he likely to prevail on his treatment of the $1.5 million sale of his future lottery payments as a long-term capital gain?

1. Facts (including assumptions)
2. Issue: Issue Statement
3. Conclusion: Short paragraph with Final answer
     o Ex) Tax should be included in year 20XX according to XXX
4. Discussion: How you got the conclusion(must include 3 primary sources)

Primary Source:
CCH Tax Research network (intelliconnect.cch.com)
Cornell.law.edu
BNA library database

Please help

Thank you

Explanation / Answer

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