Eldon R. Kenseth and Susan M. Kenseth - Page 24

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         U.S. 213, 219 (1961).  We can identify no specific exclusion from              
         gross income for the payment made to Fox & Fox.  While it is true              
         that petitioner did not physically receive the portion of the                  
         settlement proceeds used to pay the attorney’s fees, he did                    
         receive the full benefit of those funds in the form of payment                 
         for the services required to obtain the settlement.  At the time               
         that petitioner entered into the contingent fee agreement, he had              
         already been discriminated against in the form of his wrongful                 
         termination from employment.  In other words, petitioner was owed              
         damages, and the attorney was willing to enter into a contingent               
         fee agreement to recover the damages owed to petitioner.                       
         Therefore, petitioner must recognize as income the amount of the               
              In coming to this conclusion, we reject the significance                  
         placed by the U.S. Court of Appeals for the Sixth Circuit on the               
         speculative nature of the claim and/or that the claim was                      
         dependent upon the assistance of counsel.  Despite characterizing              
         petitioner’s right to recovery as speculative, his cause of                    
         action had value in the very beginning; otherwise, it is unlikely              
         that Fox & Fox would have agreed to represent petitioner on a                  
         contingent basis.  We find no meaningful distinction in the fact               
         that the assistance of counsel was necessary to pursue the claim.              
         Attorney’s fees, contingent or otherwise, are merely a cost of                 
         litigation in pursuing a client’s personal rights.  Attorneys                  

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