- 6 -
that the right to receive the future annual lottery payments did
not constitute a capital asset within the meaning of section
1221. Id. at 7. We have repeatedly relied upon the analysis in
Davis. Clopton v. Commissioner, T.C. Memo. 2004-95; Simpson v.
Commissioner, T.C. Memo. 2003-155; Johns v. Commissioner, T.C.
Memo. 2003-140; Boehme v. Commissioner, T.C. Memo. 2003-81.4 No
purpose would be served by repeating the analysis in Davis
regarding why the right to receive future annual lottery payments
does not constitute a capital asset.
Petitioners’ remaining arguments all depend upon the
determination that the lottery ticket was the property sold to
Singer under the sale agreements. This argument was considered
and rejected in Simpson and Johns.
Petitioners surrendered the lottery ticket to the
Pennsylvania Lottery and claimed the lottery prize. The lottery
prize was payable in 26 payments. Petitioners did not sell the
lottery ticket to Singer, but rather their right to future
lottery payments. Pursuant to our holding in Davis v.
Commissioner and its progeny, we conclude that the $3,372,342
4 Accord United States v. Maginnis, 356 F.3d 1179, 1187
(9th Cir. 2004) (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 under the “substitute for ordinary
income” doctrine).
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