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Thus, we have been presented, on one hand, with elements the
estate believes characterize the type of asset that should be
considered an annuity subject to valuation under prescribed
tables and, on the other hand, with features exhibited by other
assets yielding payment streams and used to derive an appropriate
fair market value apart from mere reference to actuarial tables.
The estate’s position is that the LOTTO prize involves a unique
bundle of rights and restrictions which, like those inherent in
notes, leaseholds, patents, and royalties, warrants an
individualized approach to valuation. Respondent, in contrast,
maintains that there exist no pertinent differences between the
lottery payments and other payment streams valued using the
standardized tabular approach.
Taking into account the above body of information and the
parties’ contentions with respect thereto, we conclude that
decedent’s lottery winnings constitute an annuity within the
meaning of section 7520. In reaching this decision, we first
consider the characteristics of an annuity, both as portrayed by
the estate and as reflected in case law. Second, we focus on
comparing these annuity features with those of assets which the
parties agree are valued other than as annuities. Third, we
examine how the lottery payments fit within the framework so
developed.
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