James T. Sinyard and Monique T. Sinyard - Page 10

                                       - 10 -                                         
               In ADEA cases, it is established that only the prevailing              
          parties, not the parties' attorneys, have standing to seek                  
          attorney's fees.  Benitez v. Collazo-Collazo, 888 F.2d 930, 933             
          (1st Cir. 1989); Soliman v. Ebasco Servs., Inc., 822 F.2d 320,              
          323 (2d Cir. 1987); Brown v. General Motors Corp., 722 F.2d 1009,           
          1011 (2d Cir. 1983); Rainsbarger v. Columbia Glass & Window Co.,            
          600 F. Supp. 299, 301-302 (W.D. Mo. 1984).                                  
               We recognize that there is case law treating amounts                   
          received in litigation to cover attorney's fees as not                      
          constituting taxable income.  In Cotnam v. Commissioner, 263 F.2d           
          119 (5th Cir. 1959), affg. in part and revg. in part 28 T.C. 947            
          (1957), the taxpayer entered into a contingency fee agreement               
          with her attorneys under which the taxpayer agreed to pay her               
          attorneys 40 percent of any funds recovered.  In Cotnam, we held            
          that the contingency fee agreement did not transfer any interest            
          in the judgment to the attorneys, and we held that the attorney's           
          fees that were awarded were to be included in the taxpayer's                
          income.  Cotnam v. Commissioner, 28 T.C. at 954.                            
               The Court of Appeals for the Fifth Circuit reversed and held           
          that under Alabama law the effect of the contingency fee                    
          agreement was to establish in favor of the attorneys an equitable           
          lien on 40 percent of the funds recovered, and the Court of                 
          Appeals concluded that the portion of the funds allocated to                
          attorney's fees was to be treated as owned by the attorneys, not            
          by the taxpayer, and therefore that the funds allocated to                  




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: May 25, 2011