To pass off bad news as good news. Usually it applies to when this act is incredibly obvious and poorly executed. When this is done, it is usually even more offensive than simply telling someone the bad news.
The doctor said that Joe was lucky to be paralyzed, since he'd no longer have to worry about getting into skateboarding accidents. All he did was stick a dick in his butt and call it Christmas.
It is said of the situation where a person has the bad luck to make contact with his testicles against an undefined surface or object, intentioned or not.
Given the nature of the word, it is more appropriate to design cases where the interaction is made with a moving object, for example, a ball.
Although it is extremely painful for the victim, it tends to be considerably funny to people who witness it.
Today in the baseball game the pitcher took a nutshot; the baseball hit him in the nuts.
Man, I just watched the funniest nutshot video ever.