- 39 -
9. Preventing Tax Avoidance by Other Transferors ... 89
10. Cropsharing as Alternative to Joint
Venture/Partnership Analogy ........... 90
Conclusion ......................... 97
Findings and Resulting Inferences
I would find the ultimate fact that the elements of control
over the prosecution of the ADEA claims ceded by Mr. Kenseth and
assumed and exercised by Fox & Fox under the contingent fee
agreement make it reasonable to include in petitioners’ gross
income only Mr. Kenseth’s net share of the settlement proceeds,
$138,201.10 This means that, in computing Mr. Kenseth’s gross
income from the settlement, his share of the proceeds should be
offset by the $91,800 portion of Fox & Fox’s $1,060,000
contingent fee that reduced his share of such proceeds, not by
10 In Helvering v. Horst, 311 U.S. 112 (1940) (gift of bond
interest coupons to taxpayer’s son), Justice Stone pointed out
that the ultimate question in deciding whether the assignment of
income rule applies is a question of fact whose answer should be
informed by the perceptions and reactions of the trier of fact to
the total situation:
To say that one who has made a gift thus derived from
interest or earnings paid to his donee has never
enjoyed or realized the fruits of his investment or
labor because he has assigned them instead of
collecting them himself and then paying them over to
the donee, is to affront common understanding and to
deny the facts of common experience. Common
understanding and experience are the touchstones for
the interpretation of the revenue laws. [Helvering v.
Horst, 311 U.S. at 117-118; emphasis supplied.]
See also Helvering v. Clifford, 309 U.S. 331, 338 (1940),
discussed, cited, and quoted infra p. 47.
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