- 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 toPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011