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doctrine trumps the fact that lottery rights may be considered
property for purposes other than deciding whether gain from their
sale is taxable at preferential capital gain rates. The courts
have unanimously agreed that preferential tax rates are not
applicable to the sale of the right to future lottery payments.
Petitioners also attempt to construe the true meaning of the
seminal cases underlying the doctrine in their endeavor to show
that the holdings of those cases were not intended to include the
type of factual situation we consider here. In their analysis,
petitioners reach deep into the foundations of Federal tax law,
drawing upon cases, such as Lucas v. Earl, 281 U.S. 111 (1930),
and metaphorical language, such as “fruit/tree” and “horizontal
slice/vertical slice”, to make their point that the right to
lottery payments should not be snared in the substitute for
ordinary income net. There is nothing in those opinions that
would support petitioners’ suppositions. In the face of an
extensive body of caselaw, petitioners’ arguments are
unconvincing and without substance.
Petitioners’ final argument is that lottery rights are
analogous or akin to debt instruments, such as State bonds.
Petitioners seek solace in the definition of a “debt instrument”
set forth in sections 1275(a)(1)(A) and 1286. Although
petitioners may be able to show some factual similarity between a
right to future lottery payments and debt instruments, we are
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