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represent the interests of clients in a fiduciary capacity. It
is difficult, in theory or fact, to convert that relationship
into a joint venture or partnership. The entire ADEA award was
“earned” by and owed to petitioner, and his attorney merely
provided a service and assisted in realizing the value already
inherent in the cause of action.
An anticipatory assignment of the proceeds of a cause of
action does not allow a taxpayer to avoid the inclusion of income
for the amount assigned.7 A taxpayer who enters into an agreement
for the rendering of services that assists in the recovery from a
third party must include the amount recovered (compensation) in
gross income, irrespective of whether it is received by the
taxpayer. See Hober v. Commissioner, T.C. Memo. 1984-491;
Loeffler v. Commissioner, T.C. Memo. 1983-503. This Court,
relying on Lucas v. Earl, 281 U.S. 111 (1930), has consistently
7 The assignment by a taxpayer of a right to collect a
doubtful and uncertain pending claim against the United States in
exchange for cash and other consideration did not constitute an
anticipatory assignment of income in Jones v. Commissioner, 306
F.2d 292 (5th Cir. 1962), revg. T.C. Memo. 1960-115, and thus the
taxpayer was not taxable on the amount ultimately recovered on
the claim. In Reffett v. Commissioner, 39 T.C. 869 (1963),
however, we distinguished Jones in a factual setting similar to
this case and held that proceeds from a taxpayer’s lawsuit that
were paid to witnesses for their services during the lawsuit were
includable in the taxpayer’s gross income. In addition, the U.S.
Court of Appeals for the Ninth Circuit has factually
distinguished Jones and held that an attorney’s transfer of part
of a contingent legal fee earned by him was an assignment of
income within the meaning of Lucas v. Earl, 281 U.S. 111 (1930).
Koshansky v. Commissioner, 92 F.3d 957, 958 (9th Cir. 1996),
affg. in part, revg. in part T.C. Memo. 1994-160.
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