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under section 12212 and a capital asset, that he sold a partial
interest (20 percent) in the winning lottery ticket, and that the
gain on this sale is long-term capital gain and not ordinary
income. We disagree.
First, we shall not, at this time, revisit our holding in
Davis v. Commissioner, supra. Further, we agree with respondent
that the facts in the instant case are indistinguishable from the
facts of Davis. Although petitioner claims he sold a partial
interest in his winning lottery ticket, it is clear from the
record that he obtained court approval for the assignment of his
rights to receive four of the future annual lottery payments of
$470,000 each. He then assigned those rights to Singer for $1.5
million. Pursuant to our holding in Davis, we hold that the
amounts that petitioner received for his rights to the future
annual lottery payments represent ordinary income and not capital
gains. See also Boehme v. Commissioner, T.C. Memo. 2003-81.
Decision will be
entered for respondent.
2Sec. 1221 defines the term “capital asset” generally as
“property held by the taxpayer (whether or not connected with his
trade or business)”, but excludes five specific items which are
not relevant to this case.
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Last modified: May 25, 2011