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Background
The parties submitted this case fully stipulated pursuant to
Rule 122.1 The stipulation of facts and the attached exhibits
are incorporated herein by this reference. Petitioners, Mr.
Simpson and Mrs. Simpson, are husband and wife and resided in
Santa Barbara, California, at the time they filed their petition.
On April 29, 1992, Mr. Simpson won a California lottery
prize of $15,740,000. Under California law at that time, the
prize was payable in 20 annual installments of $787,000, with the
first installment payable on April 29, 1992, and subsequent
installments payable each year on April 29 through the year 2011.
On July 20, 1992, Mr. Simpson assigned his California lottery
prize to the Simpson Trust.2
On April 20, 1997, Mr. Simpson, in his capacity as trustee
of the Simpson Trust, assigned a portion of the lottery prize to
Singer Asset Finance Company, LLC (Singer). Under the assignment
agreement, all rights to $140,000 of 12 annual lottery payments
1Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
2The evidence in the record indicates that Mr. Simpson was
the sole trustee of the Simpson Trust and that he took all
subsequent actions with respect to the annual lottery payments
discussed herein in his capacity as trustee. Petitioners
apparently have taken and continue to take the position, which
respondent does not dispute, that all income of the Simpson Trust
is includable in their income.
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Last modified: May 25, 2011