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What sections of the IRC are applicable to lottery winnings and how to held them?

What sections of the IRC are applicable to lottery winnings and how to held them?

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Answer : -

The IRS deduct 25% of the lottery winnings prize before the prize is even gets to the winner. Then the winner has to pay tax on the remaining amount during tax filing.

The distribution of prize money is upto the winner, the winner can have one time payment or can have payments in installment for 30 years maximum.

The winner has following options : -

1) Cash option : - taxable under IRC section 61 and 74.

2) Annuity option and 3) Sale of lottery ticket.

Winners can deduct lottery losses and cannot take losses under itemized deductions.

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