After examining the briefs and appellate record, this panel has determined *

unanimously that oral argument would not materially assist the determination of

this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument. This order and judgment is

not binding precedent, except under the doctrines of law of the case, res judicata,

and collateral estoppel. The court generally disfavors the citation of orders and

judgments; nevertheless, an order and judgment may be cited under the terms and

conditions of 10th Cir. R. 36.3.

F I LED

United States Court of Appeals

Tenth Circuit

May 19, 2006

Elisabeth A. Shumaker

Clerk of Court

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

ROGER LESLIE WOLMAN;

CAROLINE R. WOLMAN,

 Petitioners-Appellants,

 v.

COMMISSIONER OF INTERNAL

REVENUE,

 Respondent-Appellee.

No. 05-9001

(T.C. No. 18953-02)

(Tax Court)

ORDER AND JUDGMENT

*

Before McCONNELL, ANDERSON, and BALDOCK, Circuit Judges.

In 1994, petitioner Roger Leslie Wolman won $1,500,000 in the Colorado

lottery, payable in twenty-five annual installments. Mr. Wolman and his wife,

petitioner Caroline R. Wolman, reported the first five payments as ordinary

income on their federal tax returns. In 1998, Mr. Wolman sold his right to
-2-

receive the remaining lottery installment payments to Capital First Financing

Corp. in exchange for two lump sum payments, payable in 1998 and 1999. The

Wolmans reported this sale on their 1998 and 1999 tax returns as the sale of a

capital asset resulting in a capital gain. The Internal Revenue Service (IRS)

issued the Wolmans a notice of deficiency for those two years, determining the

lump sum payments received for the assignment of the right to the future lottery

installment payments was taxable as ordinary income. The Wolmans filed a

petition with the Tax Court disputing the IRS’s determination. The Tax Court

agreed with the IRS and held that the lump sum amounts constituted ordinary

income and not capital gains. Wolman v. Comm’r, T.C. Memo. 2004-262 (T.C.

2004). After the Tax Court denied the Wolmans’ motion to vacate or revise the

decision, they appealed. 

On appeal, the Wolmans continue to argue that the money received from

Capital First Financing in 1998 and 1999 was long term capital gain and not

ordinary income. This court recently considered and rejected this argument in a

case presenting very similar facts. See Watkins v. Comm’r, No. 04-9016,

___ F.3d ___, 2006 WL 1266530 (10th Cir. May 10, 2006). For the same reasons

stated in Watkins, we reject the Wolmans’ argument and hold that the lump sum

payments were taxable as ordinary income. 

The Wolmans also argue that Mr. Wolman made a capital investment in

lottery tickets in excess of $4000 from January 28, 1989 through April 2, 1994. 
-3-

They contend that this “investment” makes the right to the lottery installment

payments a capital asset. We reject this argument. The purchase of lottery

tickets is not an underlying investment of capital. See Watkins, 2006 WL

1266530, at *3 n.4. Also, neither Mr. Wolman’s purchase of a computer, printer,

and a lottery computer program nor the time he spent making his lottery picks

were capital investments. 

Accordingly, we AFFIRM the judgment of the Tax Court. 

Entered for the Court

Stephen H. Anderson

Circuit Judge