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Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioner resided in Washington, Missouri, at the time that she
filed her petition.
Petitioner married James M. Nichols (Nichols) on
November 19, 1988. Petitioner and Nichols separated in March
2000 and were divorced on January 17, 2001.
Nichols was a member of a group of 12 individuals who won
the Connecticut State Lottery drawing on October 28, 1987.
Nichols’s portion of the lottery prize was $756,540, payable over
20 years in annual installments of $37,827. At the time that she
married Nichols, petitioner knew that Nichols had won a lottery
and received approximately $30,000 per year in lottery proceeds.
On August 21, 1997, petitioner executed a Certificate of
Marital Status that was to be attached as exhibit “B” to a
Lottery Prize Assignment Agreement between Nichols and Woodbridge
Sterling Capital, LLC. Petitioner inserted her name, address,
and Social Security number on the Certificate of Marital Status
and dated it and signed it before a notary public. The
Certificate of Marital Status expressly stated:
I consent to my spouse entering into the
Assignment and furthermore to the application to a
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