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Petitioners argue in the alternative that they are in the
"identical position as the taxpayers in Cotnam and Davis." See
Cotnam v. Commissioner, 263 F.2d 119 (5th Cir. 1959), affg. in
part and revg. in part 28 T.C. 947 (1957); Davis v. Commissioner,
T.C. Memo. 1998-248. While as to the salient facts this may be
true, petitioners' legal position is not the same.
In Cotnam v. Commissioner, supra at 125, the Court of
Appeals for the Fifth Circuit concluded that under 46 Ala. Code
sec. 64 (1940), attorneys have the same right over "suits,
judgments, and decrees for money" as their clients, so the
taxpayer in that case did not realize income as to her attorneys'
interests of 40 percent in her cause of action and judgment.
Davis v. Commissioner, supra, involving the case of a taxpayer
who was a resident of Alabama, followed Cotnam. See Golsen v.
Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir.
1971).
The law of Alabama, as analyzed in Cotnam, is not the law of
California, the State of petitioners' residence during all times
relevant here. The parties have not brought to our attention any
statute of California regulating attorney's liens, and we are
aware of none. Nevertheless, the case law of California is clear
that liens for attorney's fees, whether created expressly or
implied from a retainer agreement, do not transfer to the
attorney an ownership or proprietary interest in the client's
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