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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
deficiencies:
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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