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that petitioners received from Singer constitutes ordinary income
because petitioners received that amount in exchange for their
future right to receive ordinary income.
In support of petitioners’ position that the $1,040,000 that
they received from Singer constitutes capital gain, petitioners
rely on Ark. Best Corp. v. Commissioner, 485 U.S. 212 (1988). In
support of respondent’s position that that amount constitutes
ordinary income, respondent relies on the principle established
in the following cases: Hort v. Commissioner, 313 U.S. 28
(1941); Commissioner v. P.G. Lake, Inc., 356 U.S. 260 (1958);
Commissioner v. Gillette Motor Transp., Inc., 364 U.S. 130
(1960); and United States v. Midland-Ross Corp., 381 U.S. 54
(1965).
Petitioners concede that, before the Supreme Court of the
United States (Supreme Court) decided Ark. Best Corp. v. Commis-
sioner, supra, the line of cases on which respondent relies would
have precluded characterizing petitioners’ right to receive
future annual lottery payments as a capital asset within the
meaning of section 1221. However, according to petitioners, Ark.
Best Corp. effectively overruled that line of cases and requires
the result in the instant case that they advocate. Respondent
disputes petitioners’ reading of Ark. Best Corp. v. Commissioner,
supra.
We agree with respondent’s reading of Ark. Best Corp. v.
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