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contingency occurs, the attorney has a lien on the judgment or
settlement securing his services. In re Willis, supra at 432.
Accordingly, until the contingent fee agreement between
petitioner and Branton & Hall ripened through finalization of the
lawsuit, it was executory. Once the contingency occurred, the
attorneys were entitled to a lien on the funds, which ultimately
was satisfied when they received payment according to the terms
of the agreement.
The Supreme Court has held that
The rule that income is not taxable until realized has
never been taken to mean that the taxpayer, * * * , who
has fully enjoyed the benefit of the economic gain
represented by his right to receive income, can escape
taxation because he has not himself received payment of
it from his obligor. * * * [Taxation] may occur when he
has made such use or disposition of his power to
receive or control the income as to procure in its
place other satisfactions which are of economic worth.
* * * * * * *
[T]he import of the statute is that the fruit is not to
be attributed to a different tree from that on which it
grew. [Helvering v. Horst, 311 U.S. 112, 116-120
(1940); citation omitted.]
It is for this reason that "[taxation cannot] be escaped by
anticipatory arrangements and contracts however skillfully
devised to prevent * * * [the settlement amount] when paid from
vesting even for a second in the man who earned it." Lucas v.
Earl, 281 U.S. 111, 115 (1930). It is clear that petitioner
enjoyed the full benefit of the settlement amount by using it to
pay his attorneys for their services. It is equally clear that
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