Ace High and Lady Luck live together and have pooled
Ace High and Lady Luck live together and have pooled their funds for several months to purchase food and other household necessities and to buy an occasional state lottery ticket. Ace used part of these pooled funds to buy a lottery ticket that won $ 3 million. When they discovered that the lottery proceeds could be paid only to one recipient under state law, Ace and Lady executed a “separate ownership agreement.” The agreement created an equal interest in the ticket for both Ace and Lady. Must Ace pay gift tax on the transfer of a one-half interest in the ticket to Lady? What is the value of the gift?
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