- 3 -
petitioner assigned his right to receive one annual lottery
payment of $470,000, scheduled to be made on December 8, 2001, to
Singer in exchange for $386,500. Petitioner received $1.5
million in payments from Singer in 1998 pursuant to those
agreements. Petitioner reported the $1.5 million in payments
from Singer as long-term capital gain on Schedule D, Capital
Gains and Losses, of his 1998 Federal income tax return.
Respondent determined that those payments are ordinary income to
petitioner.
Petitioner agrees that the facts of our recent opinion in
Davis v. Commissioner, 119 T.C. 1 (2002), are “nearly identical”
to the facts in the instant case. In Davis, we held that the
taxpayers’ right to receive certain future annual lottery
payments did not constitute a capital asset within the meaning of
section 1221 and that the lump-sum amount that the taxpayers
received for their right to receive the future annual lottery
payments was ordinary income and not capital gain. Id. at 7.
Petitioner asks us to revisit our opinion in Davis, because
the taxpayer in that case did not argue, and we did not consider,
whether the winning lottery ticket was a capital asset, and
because of our interpretation of the U.S. Supreme Court opinion
in Ark. Best Corp. v. Commissioner, 485 U.S. 212 (1988).
Petitioner contends that the winning lottery ticket is “property”
Page: Previous 1 2 3 4 Next
Last modified: May 25, 2011