Roland and Marie Womack - Page 9

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          three Federal Courts of Appeals.  We proceed to consider their              
               Background/Case Development--A large part of this Court’s              
          analysis in prior opinions focused on whether a taxpayer’s right            
          to receive future annual lottery payments constitutes a capital             
          asset within the meaning of section 1221.  Generally, respondent            
          acknowledges that the definition of “capital asset” in section              
          12212 is broad and that the right to receive future annual                  
          lottery payments is a property right.  Respondent, however,                 
          relying on an established line of cases,3 contends that the                 
          property we consider should not be treated as a capital asset or            
          taxed at the preferred capital gain tax rate.  Other taxpayers              
          have generally countered respondent’s position by contending that           
          the Supreme Court’s opinion in Arkansas Best in some manner                 
          obviated or lessened the effect of the line of cases respondent             
          relies on.  This Court has consistently held that the Supreme               
          Court’s interpretation of section 1221 in Arkansas Best did not             
          modify the principle of the prior line of cases as applicable to            

               2 Sec. 1221 broadly defines the term “capital asset”, as               
          follows:  “For purposes of this subtitle, the term ‘capital                 
          asset’ means property held by the taxpayer (whether or not                  
          connected with his trade or business), but does not include”.               
          None of the exceptions listed in sec. 1221 appears to be directly           
          relevant to the type of property we consider here.                          
               3 United States v. Midland-Ross Corp., 381 U.S. 54 (1965);             
          Commissioner v. Gillette Motor Transp., Inc., 364 U.S. 130                  
          (1960); Commissioner v. P.G. Lake, Inc., 356 U.S. 260 (1958);               
          Hort v. Commissioner, 313 U.S. 28 (1941).                                   

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