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1999, respectively, in exchange for an assignment of a right to
receive future lottery installment payments constitutes ordinary
income or capital gain during the years in issue.
Unless otherwise noted, all section references are to the
Internal Revenue Code in effect for the years in issue. Amounts
are rounded to the nearest dollar.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time the petition
was filed, petitioners resided in Littleton, Colorado.
In 1988, Mr. Wolman purchased a computer and a computer
program, “Lotto Challenger”. Beginning in January 1989, Mr.
Wolman used this program to choose numbers each week for the
lottery.
On April 2, 1994, Mr. Wolman won $1,500,000 in the Colorado
lottery. The lottery prize amount was payable in 25 annual
installments beginning on April 4, 1994, and ending on April 4,
2018. Mr. Wolman reported the first five annual lottery
installment payments received as ordinary income on his
respective Federal tax returns.
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