Eldon R. Kenseth and Susan M. Kenseth - Page 46




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              Even if Estate of Clarks v. United States, supra, had not                 
         recently been decided in the taxpayer’s favor by the Court of                  
         Appeals for the Sixth Circuit, it would be appropriate to revisit              
         this issue.  That Congress has not yet responded to comments that              
         the itemized deduction and AMT provisions are working in                       
         unanticipated and inappropriate ways that support revision or                  
         repeal18 does not mean that courts are powerless to step in on a               

              17(...continued)                                                          
          should exceed approximately 72-73 percent of the gross recovery               
          and be treated as itemized deductions, of resulting in AMT                    
          liability--assuming the taxpayer has no substantial other income              
          in the year of recovery--that would exceed the amount of the net              
          recovery.  A case in point may be Jones v. Clinton, 57 F. Supp.               
          2d 719 (E.D. Ark. 1999) in which, after acrimonious dispute among             
          three sets of attorneys, $649,000 of the settlement proceeds of               
          $850,000 were divided among them (the settlement check was made               
          payable to plaintiff and two sets of attorneys), so as to leave               
          only $201,000 for the plaintiff.  See “Attorneys For Jones                    
          Escalate Fight Over Fees”, Washington Times A6 (1/17/99); “Jones’             
          Lawyers Battle Over Fees”, Washington Post A9 (1/20/99); “Sharing             
          Jones Settlement”, N.Y. Times A16 (3/5/99); see also Alexander v.             
          IRS, 72 F.3d 938, 946-947 (1st Cir. 1995), affg. T.C. Memo. 1995-             
          51, in which the allocated legal fee approximated 73-74 percent               
          of the total recovery, and the fee and the tax liability on it                
          appeared to exceed the net taxable recovery.                                  
               18 See, e.g., Gutman, “Reflections on the Process of                     
          Enacting Tax Law”, Tax Notes 93, 94 (Jan. 3, 2000) (Woodworth                 
          Lecture, delivered Dec. 3, 1999) (itemized deduction phaseouts);              
          IRS National Taxpayer Advocate’s Annual Report to Congress, BNA               
          Daily Tax Report GG-1, L-2 (AMT), L-9/10, L-22 (itemized                      
          deductions) (Jan. 5, 2000); Meissner, “Repeal or Revamp the AMT:              
          The Time Has Come”, 86 Stand. Fed. Tax Rep. (CCH) Tax Focus (Aug              
          19, 1999); Testimony of Stefan F. Tucker on Behalf of Section of              
          Taxation, American Bar Association, before Subcommittee on                    
          Oversight, U.S. House of Representatives, on Revenue Provisions               
          in the President’s FY 2000 Budget, Mar. 10, 1999, 52 Tax Law.                 
          577, 580-581 (1999) (AMT and itemized deductions);                            
                                                               (continued...)           






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