Dick Adams wrote:

- quote -

Does that mean that the taxpayer then has constructive
receipt on the third [business] day after the lottery
commission receives his claim - or only when the claim is
actually approved? Think of someone whose claim arrives on
December 26th; there are at least three business days left
in the year no matter how the holidays and weekends fall on
the weekly calendar. :-)

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I went to the nearest authoritative source: The Maryland
Lottery Commission. The Controller referred me to Section
5301 of Public Law 105-277 which is part of the 1998 Tax Act.

Prior to the enactment of 5301, lottery players had to
select a payout option (annuity or cash) at the time of
purchase. This was a recordkeeping burden for the
lottery commissions. 5301 creates a 60 day window after
the drawing for winners to select their payout option.
While this does not address the issue under discussion
here, 5301 contains constructive receipt explanation that
does.

=====
If a taxpayer has an unrestricted right to demand the payment
of an amount, the taxpayer is in constructive receipt of that
amount whether or not the taxpayer makes the demand and
actually receives the payment.
=====

In Maryland, if you win a lottery prize of $600 or less, you
can receive payment on demand from any lottery agent. For
$5000 or less. you can receive payment on demand from one
of over 150 lottery-plus agents throughout the State.

Because of this unrestricted right to demand payment, the
winner has constructive receipt in the year of the drawing.

However, for larger amounts claims have to be processed
through one of two Claim Centers and there is a minimum
three day waiting period for a check. The "unrestricted
right to demand payment" does not exist and the taxpayer's
receipt depends on more than the taxpayer's volition.

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