Courts split over valuation of lottery prize payments.

Tax Adviser, The, September, 2007 by Beavers, James

Two recent district court decisions have been handed down on the issue of whether an estate's rights to a decedent's remaining series of annual lottery prize payments should be valued using the Sec. 7520 annuity tables. Although both courts held that the lack of marketability of remaining lottery payments may justify the use of a valuation method other than the tables in certain circumstances, the decisions show that it may be difficult for a taxpayer to prove to a court that it is entitled to use an alternate method of valuation.

See. 7520

In general, the value of any annuity for estate tax purposes must be determined under annuity valuation tables provided by the IRS in accordance with Sec. 7520. A series of lottery prize payments is an annuity that...

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