Roland and Marie Womack - Page 18

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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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