Eldon R. Kenseth and Susan M. Kenseth - Page 52

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         Turning back to the case before him, Judge Raum found that there               
         were no such provisions in Pennsylvania law.  Judge Raum then                  
         questioned whether State law had any bearing on the matter,                    
         inasmuch as the underlying claim had been prosecuted in the                    
         United States Court of Claims under Federal law.  What followed,               
         Judge Raum’s ipse dixit on assignment of income, is dictum.  Id.:              
              However, we think it doubtful that the Internal Revenue                   
              Code was intended to turn upon such refinements.  For,                    
              even if the taxpayer had made an irrevocable assignment                   
              of a portion of his future recovery to his attorney to                    
              such an extent that he never thereafter became entitled                   
              thereto even for a split second, it would still be                        
              gross income to him under the familiar principles of                      
              Lucas v. Earl * * *, Helvering v. Horst * * *, and                        
              Helvering v. Eubank * * *.  The fee, of course, would                     
              be deductible, just as it was held to be in Weldon D.                     
              Smith.  Cf. Walter Petersen * * *.  We reach the same                     
              result here.  Petitioner is entitled to the benefit of                    
              section 1303 with respect to his $16,173.05 recovery in                   
              1957 and may deduct the $8,243.10 legal expenses in                       
              that year; such legal expenses may not be spread back                     
              over earlier years, nor may the same result be achieved                   
              indirectly by subtracting the expenses from the                           
              recovery and then applying section 1303 to the reduced                    
              Estate of Gadlow v. Commissioner, supra, is the last regular              
         Tax Court opinion in this series.  Estate of Gadlow is similarly               
         distinguishable from the case at hand.  Like the earlier cases,                
         Estate of Gadlow concerned the application of a provision for                  
         computing income tax liability upon the receipt of damages for                 
         breach of contract by prorating the recovery over the earlier                  

          107 of any express provision for allocating expenses against the              
          prorated compensation.                                                        

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