- 7 -
This is not an issue of first impression. In Davis v.
Commissioner, 119 T.C. 1 (2002), we decided the same issue under
almost identical factual circumstances. The taxpayers in that
case also won a California State lottery prize and subsequently
assigned a portion of future annual lottery payments to Singer in
exchange for a lump-sum payment. Id. at 3. We held that the
right to receive such payments does not constitute a capital
asset within the meaning of section 1221. Id. at 7. Petitioners
are aware of our holding in Davis; however, they contend that
case was incorrectly decided.
In Davis, we thoroughly analyzed section 1221 and relevant
caselaw interpreting the statute. We recently relied on and
followed our analysis in Davis. See Johns v. Commissioner, T.C.
Memo. 2003-140; Boehme v. Commissioner, T.C. Memo. 2003-81.6 No
purpose would be served by repeating the analysis that led us to
hold in Davis that the right to receive future annual lottery
payments does not constitute a capital asset.7
6Accord United States v. Maginnis, 89 AFTR 2d 2002-3028,
2002-2 USTC par. 50,494 (D. Or. 2002) (holding that the amount
that the taxpayer received in exchange for the taxpayer’s
assignment to a third party of his right to receive certain
future annual lottery payments is ordinary income).
7On brief, petitioners imply that the right to receive
future annual lottery payments is analogous to currency
contracts, stocks, bonds, and options. Unlike the situations
cited by petitioners, in this instance petitioners received the
lump-sum payment as a substitute for the right to receive
ordinary income.
Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011