Eldon R. Kenseth and Susan M. Kenseth - Page 15

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          an individual taxpayer’s deduction of legal expenses “smacks of               
          injustice” because the taxpayer is effectively robbed of any                  
          benefit from the deductibility of legal expenses as miscellaneous             
          itemized deductions), affg. T.C. Memo. 1995-51.  Despite this                 
          potential for unfairness, however, these policy issues are in the             
          province of Congress, and we are not authorized to rewrite the                
          statute.  See, e.g., Badaracco v. Commissioner, 464 U.S. 386, 398             
          (1984); Warfield v. Commissioner, 84 T.C. 179, 183 (1985).                    
               There is a split of authority among the Federal Courts of                
          Appeals on this issue.  The U.S. Court of Appeals for the Fifth               
          Circuit reversed this Court and held that amounts awarded in                  
          Alabama litigation that were assigned and paid directly to cover              
          attorney’s fees pursuant to a contingent fee agreement are                    
          excludable from gross income.  See Cotnam v. Commissioner,                    
          263 F.2d 119 (5th Cir. 1959), affg. in part and revg. in part 28              
          T.C. 947 (1957).  In Cotnam, the taxpayer entered into a                      
          contingent fee agreement to pay her attorney 40 percent of any                
          amount recovered on a claim prosecuted for the taxpayer’s behalf.             
          A judgment was obtained on the claim, and a check in the amount               
          of the judgment was made jointly payable to the taxpayer and her              
          attorney.  The attorney retained his share of the proceeds and                
          remitted the balance to the taxpayer.  The Commissioner treated               
          the total amount of the judgment as includable in the taxpayer’s              
          gross income and allowed the attorney’s fees as an itemized                   

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