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Augustin B. Jombo had diplomatic status when he won the
New York Lottery in 1989. His winnings are being paid
out over a twenty-year period. Prior audits have
denied Mr. Jombo gambling losses against his lottery
winnings under Reg. 1.165-10. The Internal Revenue
Service Agent in charge of the audit ruled that Mr.
Jombo was considered to have won the lottery in 1989,
which is the only year he is considered to have
“gambling winnings.” Therefore, since all his gambling
winnings were considered to have taken place in 1989,
his diplomatic status would exempt his lottery winnings
from income taxation. Mr. Jombo should not have to
pick up gambling winnings from the twenty-year payout
as taxable income, because he won the lottery in 1989
when he had diplomatic status.
Petitioner claimed a $4,237 net operating loss (NOL) on his
1996 return. In a separate statement attached to his 1996
return, petitioner identified the NOL as a “net operating loss
carryover”, but he did not state from which year or years he was
carrying the loss. Respondent sent petitioner a letter dated May
7, 1998, informing him that his 1996 Federal income tax return
had been selected for examination.
OPINION
A. Petitioner’s Contentions
Petitioner contends that: (1) Respondent bears the burden
of proof for all issues; (2) he is not liable for tax on his 1996
lottery payment because he constructively received all of his
lottery winnings in 1989 when he was a tax-exempt employee of the
Nigerian Consulate General; (3) his 1996 lottery winnings are a
nontaxable annuity; (4) he is entitled to a net operating loss
carryover deduction of $4,237 in 1996; and (5) he is not liable
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