Eldon R. Kenseth and Susan M. Kenseth - Page 25

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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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