James F. and Dorothy A. Davis - Page 1
















                                   119 T.C. No. 1                                     


                               UNITED STATES TAX COURT                                


                 JAMES F. DAVIS AND DOROTHY A. DAVIS, Petitioners v.                  
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      


               Docket No. 6389-01.           Filed July 3, 2002.                      


                    Ps assigned to S their right to receive a portion                 
               of each of certain future annual lottery payments in                   
               exchange for a lump-sum payment to them by S of                        
               $1,040,000.                                                            
                    Held:  S paid Ps a lump-sum amount for the right                  
               to receive certain future ordinary income.  Held,                      
               further, Ps’ right to receive certain future annual                    
               lottery payments does not constitute a capital asset                   
               within the meaning of sec. 1221, I.R.C.  Held, further,                
               the $1,040,000 that Ps received from S is ordinary                     
               income.                                                                


               Donald J. Gary, Jr., for petitioners.                                  
               Thomas J. Fernandez, for respondent.                                   







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