Roland and Marie Womack - Page 8

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          (2) the substitute for ordinary income doctrine (doctrine) has              
          been misinterpreted by the courts with respect to its origins and           
          application to the sale of a lottery right; (3) to the extent               
          that the substitute for ordinary income doctrine continues to               
          have vitality, the Supreme Court’s holding in Ark. Best Corp. v.            
          Commissioner, 485 U.S. 212 (1988) (Arkansas Best), by                       
          establishing a definitive analysis or test has limited the effect           
          of the doctrine so that lottery rights would not come within the            
          reach of the doctrine; and (4) a lottery right falls within the             
          definitions of a “debt instrument” and a “bond” under sections              
          1275 and 1286, respectively.  Consequently, the sale of a lottery           
          right would result in capital gain.                                         
               Respondent points out that the premise underlying                      
          petitioners’ contentions is that the right to receive future                
          lottery payments is “considered ‘property’ under certain                    
          provisions of Federal and state law * * * [and that therefore]              
          the right must be considered ‘property’ for purposes of * * *               
          [section 1221)(a)]”; i.e., a capital asset.  Respondent contends            
          that petitioners’ premise “has been squarely rejected by every              
          Federal court which has considered the issue.”                              
               Petitioners recognize that they are swimming against a                 
          rising tide of precedent.  However, they remain undaunted and               
          have strongly urged us to reconsider our holdings and those of              

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