Roland and Marie Womack - Page 2

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               the courts with respect to its origins and application                 
               to the sale of a lottery right; (3) to the extent that                 
               the doctrine continues to have vitality, the Supreme                   
               Court’s holding in Ark. Best Corp. v. Commissioner, 485                
               U.S. 212 (1988), by establishing a definitive analysis                 
               or test has limited the effect of the doctrine; and (4)                
               a lottery right falls within the definitions of a “debt                
               instrument” and a “bond” under secs. 1275 and 1286,                    
               I.R.C., respectively, and its sale would result in                     
               capital gain.                                                          
               Held:  Ps have failed to show that established legal                   
               precedent is in error, and the gains are taxable as                    
               ordinary income.                                                       

               Steven M. Kwartin, for petitioners.                                    
               Timothy Maher, for respondent.                                         

                                   MEMORANDUM OPINION                                 

               GERBER, Judge:  These consolidated cases are part of a                 
          larger group of cases1 all with the common legal issue of whether           
          gain from the sale of a right to receive future annual lottery              
          payments is taxable as capital gain or as ordinary income.                  
          Respondent issued separate notices of deficiency to petitioners             
          in the above-captioned cases determining the following income tax           

               1 There are 57 related cases in the group that were not                
          consolidated for trial, briefing, and opinion with the above-               
          captioned cases.  The parties in the 57 related cases have agreed           
          to be bound by the outcome of these consolidated cases.                     

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