Eldon R. Kenseth and Susan M. Kenseth - Page 16

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          deduction.  This Court agreed with the Commissioner, holding that             
          the taxpayer realized income in the full amount of the judgment,              
          even though the attorney received 40 percent in accordance with               
          the contingent fee agreement.                                                 
               The U.S. Court of Appeals for the Fifth Circuit’s reversal               
          was based on two legal grounds.  An opinion by Judge Wisdom on                
          behalf of the panel reasoned that, under the Alabama attorney                 
          lien statute, an attorney has an equitable assignment or lien                 
          enabling the attorney to hold an equity interest in the cause of              
          action to the extent of the contracted for fee.  See id. at 125.              
          Under the Alabama statute, attorneys had the same right to                    
          enforce their lien as clients have or had for the amount due the              
          clients.  See id.                                                             
               The other judges in Cotnam, Rives and Brown, in a separate               
          opinion, stated that the claim involved was far from being                    
          perfected and that it was the attorney’s efforts that perfected               
          or converted the claim into a judgment.  Judge Wisdom, in the                 
          second of his opinions, dissented, reasoning that the taxpayer                
          had a right to the already-earned income and that it could not be             
          assigned to the attorneys without tax consequence to the                      
          assignor.  The Cotnam holding with respect to the Alabama                     
          attorney lien statutes has been distinguished by this Court from              
          cases interpreting the statutes of numerous other states.                     
          Significantly, this Court has, for nearly 40 years, not followed              

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