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Article: Tax Watch: Sale on extraordinary win deemed ordinary income.(News)
- Article from:
- Investment News
- Article date:
- May 24, 2004
CopyrightCOPYRIGHT 2004 Crain Communications, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Byline: Mark Battersby
The U.S. Tax Court recently ruled that a payment that an individual received in exchange for the right to receive future lottery payments is ordinary income and not a capital gain.
In 1997, Alden Clopton and two co-workers purchased Texas lottery tickets. They won $9 million, payable in 25 annual installments. In 1997, the winners established a trust to which they assigned their lottery interests. Mr. Clopton held a one-third interest in the trust.
In 1999, he sold his interest to Singer Asset Finance Co. LLC of Boca Raton, Fla., for $1.16 million. Singer sent him a 1999 Form 1099-B, "Proceeds from Broker and Barter ...