Roland and Marie Womack, (2006)
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Roland and Marie Womack, (2006)
T.C. Memo. 2006-240
UNITED STATES TAX COURT ROLAND AND MARIE WOMACK, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent ANASTASIOS AND MARIA SPIRIDAKOS, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket Nos. 13434-03, 19829-03. Filed November 7, 2006.We consider two test cases that involve the purely legal question of whether gain from the sale of the right to receive future annual lottery payments is taxable as ordinary income or capital gains. This Court and three Courts of Appeals have consistently held that gain from such a sale is taxable as ordinary income. R relies on established precedent, and Ps contend, as a matter of law, that prior opinions on this question are in error. Ps advance four categories of legal arguments, as follows: (1) Lottery rights are capital assets because they are denominated 'accounts receivable' under the Florida Uniform Commercial Code and, as such, are not in the category 'business accounts receivable' so as to be excluded from the statutory definition of capital asset under sec. 1221(a)(4), I.R.C.; (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 doctrine continues to have vitality, the Supreme Court's holding in Ark. Best Corp. ...See the full content of this document
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