Lattera v. Commissioner
United States Court of Appeals for the Third Circuit
437 F.3d 399 (2006)
Relevant factsFree
George and Angeline Lattera (plaintiffs) won a lottery jackpot of over $9 million payable in annual installments over 26 years, and with 17 installments remaining, sold their right to the remaining payments for a lump sum, reporting the sale as a capital asset on their tax return; the IRS (defendant) determined the proceeds should instead be taxed as ordinary income, and the Latteras - who acknowledged each individual installment payment was itself ordinary income - appealed.
IssueFree
Whether lump-sum consideration substituting for something that would otherwise be received at a future time as ordinary income is taxed as ordinary income.