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Goldman v. Commissioner, supra. Petitioner became entitled to
the stream of payments not by reason of any exchange of
consideration, but by virtue of winning a wager, a separate
taxable event under U.S. tax law constituting an accession to
wealth. See, e.g., McClanahan v. United States, 292 F.2d 630,
631-632 (5th Cir. 1961); Solomon v. Commissioner, 25 T.C. 936,
938-939 (1956); Lutz v. Commissioner, T.C. Memo. 2002-89;
Lyszkowski v. Commissioner, T.C. Memo. 1995-235, affd. without
published opinion 79 F.3d 1138 (3d Cir. 1996). Thus, the
payments petitioner received from the California State Lottery
were neither “in return for” the $1 consideration he cites, nor
was this consideration “adequate and full” with respect to those
payments. The payments were the proceeds of a winning wager;
i.e., gambling winnings.
Petitioner also relies upon Estate of Shackleford v. United
States, 82 AFTR 2d 98-5538, 98-2 USTC par. 60,320 (E.D. Cal.
1998), affd. 262 F.3d 1028 (9th Cir. 2001), to support his claim
that the $1 purchase price of the lottery ticket was adequate and
full consideration for the lottery payments. In that case, a
decedent lottery winner’s estate argued that the decedent’s right
to California lottery payments, if deemed an annuity, should not
be included in the gross estate by virtue of section 2039(b).
9(...continued)
chance. See sec. 31.3402(q)-1(d), Example (10), Employment Tax
Regs.
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