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unique arguments that would cause us to stray from the holding we
reached in Davis v. Commissioner, supra; the end result is the
same. The relevant events occurred after Mr. Wolman won the
lottery, i.e., the assignment of future lottery installment
payments, and those events do not change his receipt of ordinary
income into gain from a sale of a capital asset.
Further, petitioners’ argument that their assignment of all
rights and benefits related to the lottery installment payments
caused the character of the transaction to change must also fail.
In Lattera v. Commissioner, supra, the taxpayers similarly
assigned their “rights, title, and interest in the lottery prize”
to a third party, and we held that the amount received by the
taxpayers from the third party for the assignment of future
lottery payments was ordinary income, not capital gain. See also
United States v. Maginnis, 356 F.3d 1179, 1186-1187 (9th Cir.
2004)(concluding that a sale of an entire interest in a lottery
winning is “not a persuasive reason to treat the sale of that
right as a capital gain.”).
Pursuant to Davis v. Commissioner, supra, and its progeny,
we hold that the amounts received by petitioners from Capital
First in exchange for Mr. Wolman’s right to receive the remaining
lottery installment payments are ordinary income and not capital
gains.
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