Davis v. Commissioner
United States Tax Court
119 T.C. 1 (2002)
Relevant factsFree
Davis (plaintiff) won a California lottery jackpot payable in 20 annual installments and later sold his rights to a portion of the remaining installments for a discounted lump sum, reporting the proceeds as capital gain on his tax return; the Commissioner (defendant) recharacterized the proceeds as ordinary income, and Davis petitioned the Tax Court for redetermination, relying on a footnote in a Supreme Court case he read as broadening the definition of capital assets.
IssueFree
Whether a federal taxpayer's right to receive future payments of ordinary income is a capital asset.