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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
6(...continued)
(11th Cir., Apr. 10, 2000), where the District Court generally
followed Cotnam as binding precedent, but denied litigation cost
explaining:
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 �
7430.
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