MGMT $547$ Tax Research and Procedures

Fact Situation

Recently, one of the firm's clients won $$50,000,000$ in the Power Ball drawing. The award only allows for

receipt over a $20$ year period of time. A settlement company has offered the client a current lump sum

payment of $$26,000,000.$ The client would like to know the tax implications of each option. One of her

specific questions is whether the right to the lottery payout is a capital asset for purposes of applying the

capital gain tax. Please write a memo addressing the client's questions. The memo should be laid out in

the fashion discussed in class.

Key Issues:

$-$ What is property?

$-$ What is a capital asset?

$-$ Difference between ordinary income and capital gains$/$losses

Analysis:

Conclusions: