Shirley B. Prebola, N.K.A. Shirley D. Begy v. Commissioner of Internal Revenue

The issue in this case is whether lump-sum proceeds received from a sale of future interest in lottery payments should be characterized for income tax purposes as a capital gain or as ordinary income. The United States Courts of Appeals for the Third, Ninth, and Tenth Circuits, along with the United States Tax Court in numerous rulings, have all held that such proceeds are properly characterized as ordinary income. See Lattera v. C.I.R., 437 F.3d 399 (3d Cir.2006); United States v. Maginnis, 356 F.3d 1179 (9th Cir.2004); Watkins v. C.I.R., 447 F.3d 1269, 1271 (10th Cir.2006); see, e.g.,…