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Transp., Inc., supra; and United States v. Midland-Ross Corp.,
supra, and certain of their progeny8 on which respondent relies.
As the Supreme Court stated in Commissioner v. Gillette Motor
Transp., Inc., supra at 134:
While a capital asset is defined in � 117(a)(1)
[of the Internal Revenue Code of 1939] as “property
held by the taxpayer,” it is evident that not every-
thing which can be called property in the ordinary
sense and which is outside the statutory exclusions
qualifies as a capital asset. * * *
Petitioners assigned to Singer their right to receive a
portion of certain future annual lottery payments. In exchange
for petitioners’ assignment, petitioners received the discounted
value (i.e., $1,040,000) of certain ordinary income which they
otherwise would have received during the years 1997 through 2007.
We hold that Singer paid petitioners $1,040,000 for the right to
receive such future ordinary income, and not for an increase in
the value of income-producing property.9 We further hold that
8E.g., Furrer v. Commissioner, 566 F.2d 1115 (9th Cir.
1977), affg. T.C. Memo. 1976-331; Vaaler v. United States, 454
F.2d 1120 (8th Cir. 1972); United States v. Dresser Indus., Inc.,
324 F.2d 56 (5th Cir. 1963).
9It is well established that the purpose for capital-gains
treatment is
to afford capital-gains treatment only in situations
typically involving the realization of appreciation in
value accrued over a substantial period of time, and
thus to ameliorate the hardship of taxation of the
entire gain in one year. * * * [Commissioner v.
Gillette Motor Transp., Inc., 364 U.S. 130, 134 (1960)
(citing Burnet v. Harmel, 287 U.S. 103, 106 (1932)).]
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