T.C. Memo. 2003-81
UNITED STATES TAX COURT
PETER U. AND MARY M. BOEHME, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6668-00. Filed March 20, 2003.
M (who together with her husband, P, filed joint
returns for the audit years) assigned her right to
receive certain future annual lottery payments in
exchange for a lump-sum payment to her by W of
$400,000. M used $250,000 of the $400,000 to repay
loans to M, which had been secured by the future annual
lottery payments. Of the $250,000, $186,000
represented repayment of the outstanding principal
amount of the loans and the $64,000 balance qualified
as the payment of interest.
1. Held: M’s right to receive certain future
annual lottery payments does not constitute a capital
asset. Davis v. Commissioner, 119 T.C. 1 (2002)
followed.
2. Held, further, the $400,000 that M received
from W is ordinary income.
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