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(less certain tax withholding) of each of the $679,000 future
annual lottery payments (less certain tax withholding) to which
they had been entitled prior to that assignment. After that
assignment, CSL was to pay the balance of each of those future
annual lottery payments (i.e., $165,000 (less certain tax with-
holding)) to Singer.
At all relevant times, the laws of the State of California
precluded a lottery winner from assigning such person’s right to
receive future annual lottery payments without obtaining Califor-
nia Superior Court approval. On or about July 22, 1997, peti-
tioners and Singer filed with the California Superior Court for
the County of Sacramento (Sacramento County Superior Court) a
joint petition “FOR AN ORDER APPROVING VOLUNTARY ASSIGNMENT OF
LOTTERY WINNINGS”. On August 1, 1997, Sacramento County Superior
Court issued an order approving petitioners’ assignment.
Singer issued to petitioners Form 1099-B, Proceeds From
Broker and Barter Exchange Transactions (Form 1099-B), for 1997.
That Form 1099-B showed gross proceeds from the sale of “Stocks,
bonds, etc.” in the amount of $1,040,000.
CSL issued to petitioners Form W-2G, Certain Gambling
Winnings (Form W-2G), for 1997. That Form W-2G showed “Gross
winnings” from “STATE LOTTERY” of $514,000 and tax withheld of
$143,920.
On March 13, 1998, petitioners signed Form 1040, U.S.
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Last modified: May 25, 2011