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We held that the right to receive such future annual payments
does not constitute a capital asset within the meaning of section
1221 and, therefore, the lump-sum payment was ordinary income.
Id. at 7. We have subsequently relied on and followed our
analysis in Davis. See Simpson v. Commissioner, T.C. Memo. 2003-
155; Johns v. Commissioner, T.C. Memo. 2003-140; Boehme v.
Commissioner, T.C. Memo. 2003-81.
In Simpson v. Commissioner, supra, we addressed a situation
with facts almost identical to the instant case. The lottery
winner in that case assigned his lottery prize to a trust of
which he was sole trustee. Like the taxpayers in Davis v.
Commissioner, supra, the lottery winner took the position that
all income of the trust was includable in his income. Id. at
n.2. The lottery winner subsequently entered into assignment
agreements whereby the right to receive all future annual lottery
payments for the years 1999 through 2008, and a portion of the
payments for 1997 and 1998, was assigned to Singer. The trust
retained the right to a portion of the payments for 1997 and
1998, and the right to receive future annual payments for the
years 2009, 2010, and 2011 was not assigned. Relying on our
analysis in Davis, we held that the right to receive the future
annual lottery payments did not constitute a capital asset.
Additionally, we noted that the right to receive future annual
lottery payments is distinguishable from currency contracts,
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