Eldon R. Kenseth and Susan M. Kenseth - Page 23

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              Section 61(a) provides that “gross income means all income                
         from whatever source derived,” and typically, all gains are taxed              
         unless specifically excluded.  See James v. United States, 366                 

          (11th Cir., Apr. 10, 2000), where the District Court generally                
          followed Cotnam as binding precedent, but denied litigation cost              
                    The court does not find, however, that under �                      
               7430(c)(4)(A)(i) the position of the United States                       
               (i.e., with respect to Cotnam) was not substantially                     
               justified.  Yes, the court does conclude that Cotnam                     
               does control most of the issues respecting attorney’s                    
               fees and, until the Court of Appeals or Supreme Court                    
               rules otherwise, is binding on this court.                               
                    But there are serious and legitimate questions as                   
               to whether the holding in Cotnam should continue to be                   
               followed in this or other circuits.  Strong arguments                    
               can be made–-and presumably will be made by the                          
               government in seeking en banc consideration of this                      
               issue in the Davis case or on appeal of this case–-that                  
               Cotnam is not consonant with Supreme Court decisions                     
               like Horst and, indeed, is based on a misinterpretation                  
               of Alabama law involving contingent fee contracts and                    
               attorneys’ lien rights.  In particular, Cotnam did not                   
               give attention to the continuing control that, even                      
               after entering into a contingent fee contract, the tort                  
               plaintiff has with respect to settlement of the                          
               entirety of the claim or to the continuing power of the                  
               client to discharge an attorney and effectively cancel                   
               the “assignment” of a share in later recoveries.  The                    
               1998 appeal by the government of Davis, filed before                     
               this case was brought, indicated that its attack upon                    
               Cotnam represents a fundamental disagreement with that                   
               decision, and not some personal animus against Foster                    
               in the present case.  The rejection in January 2000 by                   
               a second appellate court (the Sixth Circuit in the                       
               Estate of Clarks case) does not support an assertion                     
               that the government’s [sic] in this case was without                     
               substantial foundation.  This court determines that                      
               Foster is not entitled to litigation costs under �                       

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