Federal Tax Research 10th Edition by Roby Sawyers,William Raabe,Gerald Whittenburg,Steven Gill

تمرين 52

Phred Phortunate won his state lotto two years ago. His lotto ticket was worth $10 million, which was payable in 20 annual installments of $500,000 each. Phred paid $1 for the winning ticket. The lotto in Phred's state does not allow winners to receive their payout in a lump sum. Phred wanted all his money now, so he assigned his future lotto winnings to Happy Finance Company for a discounted price of $4.5 million. Assignment of lotto winnings is permitted by Phred's state lotto. Phred filed his tax return and reported the assignment of the lotto winnings as a capital gain ($4.5 million-$1 basis) taxable at a 15 percent rate.
After appropriate research to determine if Phred correctly reported his lotto winnings assignment, prepare (in good form) a research memorandum to the file. (See Chapter 2 for an illustration of the structure of a tax memo.) Then write a letter to Phred explaining your findings. His address is 2345 Ecstatic Street, White River Junction, VT 05001.