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Some of the money received by the Florida State Lottery is
invested in U.S. Treasury zero coupon bonds that, upon maturity,
provide the funding to pay lottery winners. The Florida State
Lottery is both owner and beneficiary of the investments used to
fund payments to lottery winners. The Florida State Lottery did
not offer winners the option of a lump-sum payment at the time
Mr. Womack won the lottery. Under Florida law, Mr. Womack was
required to obtain the approval of the Circuit Court of the
Second Judicial Circuit, in and for Leon County, Florida, to
transfer his right to receive future lottery winnings.
On or about November 10, 1999, Mr. Womack entered into an
agreement with Singer Asset Finance Co., L.L.C. (Singer), to sell
and assign all of his remaining rights to receive his 16
remaining annual lottery payments in the gross stated amount of
$2.4 million, payable in annual installments through the year
2016. In exchange for Mr. Womack’s agreement to assign his
remaining lottery installments, Singer paid him a lump sum of
$1.328 million during the year 2000. Mr. Womack obtained the
approval of the Florida Circuit Court in the form of a court
order dated December 5, 1999. The Florida State Lottery
confirmed receipt of the court-approved assignment on December 9,
1999.
The Womacks reported the first four $150,000 lottery
installment payments for 1996 through 1999 as ordinary income on
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Last modified: May 25, 2011