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OPINION
CHIECHI, Judge: Respondent determined a deficiency in
petitioners’ Federal income tax (tax) for 1997 in the amount of
$210,166.
We must determine whether the amount that petitioners
received in exchange for the assignment of their right to receive
a portion of certain future annual lottery payments is ordinary
income or capital gain.1 We hold that that amount is ordinary
income.
Background
This case was submitted fully stipulated. The facts that
have been stipulated are so found except as stated herein.
Petitioners resided in Lake Arrowhead, California, at the
time they filed the petition.
On July 10, 1991, petitioner James F. Davis (Mr. Davis) won
$13,580,000 in the California State Lottery’s On-Line LOTTO game
(lottery). Pursuant to certain rules and regulations governing
1Petitioners paid and claimed as basis $7,009 in legal fees
in connection with the assignment in question (assignment cost).
In the notice of deficiency (notice) issued to petitioners for
their taxable year 1997, respondent disallowed the assignment
cost as basis but determined that cost to be a miscellaneous
itemized deduction. In the petition, petitioners contested
respondent’s determination in the notice with respect to the
assignment cost. On brief, petitioners make no arguments or
contentions with respect to that cost. We conclude that peti-
tioners have abandoned contesting respondent’s determination in
the notice with respect to the assignment cost. See Rybak v.
Commissioner, 91 T.C. 524, 566 n.19 (1988).
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Last modified: May 25, 2011