Section of Taxation Publications
  VOL. 56
NO. 1
FALL 2002
Contents | TTL Home

 Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
Treating Lottery Payments as an Annuity for Estate Tax Purposes: Estate of Gribauskas v. Commissioner
Petra R. Smeltzer


In Estate of Gribauskas v. Commissioner, the Tax Court held that a decedent’s right to receive lottery payment installments constituted a private annuity, which should be valued through the use of the actuarial tables mandated by section 7520. The lottery payments were includable in the decedent’s gross estate under section 2033 even though the right to these payments was unmarketable, illiquid, and nontransferable. This characterization of the lottery payments did not warrant the departure from the actuarial tables and use of a general market willing-buyer, willing-seller valuation. The result in Gribauskas is of particular interest because the Tax Court’s decision is contrary to the result reached by the United States District Court for the Eastern District of California and, subsequently, by the United States Court of Appeals for the Ninth Circuit, in Estate of Shackleford v. United States. An appeal of Gribauskas is now pending.

Part I of this Note provides the general statutory estate tax framework, the application of the section 2039 annuity provision, and the valuation options. Part II sets forth the facts of Gribauskas. Part III explains the estate’s arguments. Part IV discusses the opinion of the Tax Court. Finally, Part V, after analyzing the court’s decision, and comparing it with the contrary rulings by the District Court and the Court of Appeals in Shackleford, concludes that the decision was correct and discusses its implications for estate planning.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


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