                                                                      F I L E D
                                                               United States Court of Appeals
                                                                       Tenth Circuit
                      UNITED STATES CO URT O F APPEALS
                                                                      May 19, 2006
                            FO R TH E TENTH CIRCUIT                Elisabeth A. Shumaker
                                                                       Clerk of Court

    R OG ER LESLIE WO L MA N ;
    C AROLIN E R . WO L MA N ,

              Petitioners-Appellants,
                                                         No. 05-9001
     v.                                              (T.C. No. 18953-02)
                                                         (Tax Court)
    C OM M ISSIO N ER OF IN TER NAL
    REVENU E,

              Respondent-Appellee.



                             OR D ER AND JUDGM ENT *


Before M cCO NNELL, A ND ER SO N, and BALDOCK , Circuit Judges.


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

lottery, payable in twenty-five annual installments. M r. W olman and his wife,

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

income on their federal tax returns. In 1998, M r. W olman sold his right to




*
       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not binding precedent, except under the doctrines of law of the case, res judicata,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.
receive the remaining lottery installment payments to Capital First Financing

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

W olmans 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 W olmans 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 W olmans 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. M emo. 2004-262 (T.C.

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

decision, they appealed.

      On appeal, the W olmans 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 W L 1266530 (10th Cir. M ay 10, 2006). For the same reasons

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

payments were taxable as ordinary income.

      The W olmans also argue that M r. W olman made a capital investment in

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

                                         -2-
They contend that this “investment” makes the right to the lottery installment

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

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

1266530, at *3 n.4. Also, neither M r. W olman’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




                                        -3-
