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Tuesday, August 05, 2008

Amusing legal ruling: Lottery tickets are not an investment

I subscribe to Westlaw's "Headnote of the Day" and thought today's was pretty funny:
Purchase of lottery tickets was not an underlying investment of capital for tax purposes.
Wolman v. C.I.R.,, 180 Fed.Appx. 830 (2006)
In other words, don't try to claim the amount you wasted on lottery tickets as an investment loss. :D

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5 Comments:

  • At 8/5/08, 10:55 PM, Anonymous Anonymous said…

    This wasn't about an investment loss, it was about a lottery winner who tried to claim a capital gain (and thus a lower tax rate) when he sold future annual payouts for a cash lump sum.

    While the underlying reasoning and result fit your post, you cut corners.

    If I were in a similar position, I would have used a different argument:

    As a poor person, $1 is all I can invest. In the absence of preferable $1 investments, I invested my dollar the best way available to me. In the absence of other $1 investments, the Court has scant ground to disallow petitioner's claim.

     
  • At 8/6/08, 5:21 AM, Blogger Chief Family Officer said…

    @anon - Fair enough, I did cut corners in that I didn't read the case, just the headnote. Thanks for providing clarifying details. Interesting argument to advance - I wish I knew enough about that area of the law to evaluate it!

     
  • At 8/6/08, 5:28 AM, Anonymous jim said…

    I don't really see this as a law blog, more or less a family/personal finance blog, so I don't think it's cutting corners.

     
  • At 8/11/08, 10:07 AM, Anonymous Anonymous said…

    I think you can claim gambling losses, can't you? Not sure if that includes lottery, though (not a gambler or a lottery player).

     
  • At 8/13/08, 1:32 PM, Blogger Chief Family Officer said…

    @Jim - Thanks!

    @Anon - I'm not a tax lawyer, but that does sound familiar. And I might be making this up, but I think it might have been only if you also had winnings, i.e., your losses could be used to offset your winnings, but not to reduce your other taxable income.

     

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