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whether the Tax Court can and should apportion the respective
gross incomes of client and attorney pursuant to a contingent fee
agreement under which the client gives up substantial control
over the prosecution and recovery of his claim.
3. Another Reason for Reexamination: Repeal of Statutory
Spreadback and Averaging Provisions
The history of the statutory spreadback provisions is
instructive in another respect.27 In 1964, those provisions were
repealed in favor of general income averaging.28 In 1970,
Congress enacted the 50-percent maximum tax on earned income,
which was in turn repealed in 1981, when the top income tax rate
27 Under the 1954 Code, taxpayers were afforded six targeted
spreadback (or averaging) provisions that were intended to
mitigate the harsh effects of progressive tax rates on income
earned unevenly over the years. See secs. 1301-1307 (1954 Code).
These relief provisions applied only to particular types of
income (e.g., employment compensation, back pay, breach of
contract damages, income from inventions or artwork, antitrust
damages) earned or received over specified periods of time.
28 Congress amended the targeted averaging provisions in the
Revenue Act of 1964, stating that “A general averaging provision
is needed to accord those whose incomes fluctuate widely from
year to year the same treatment accorded those with relatively
stable incomes.” S. Rept. 830, 88th Cong., 2d Sess. (1964),
1964-1 C.B. (Part 2) 505, 643, 644. Congress explained that the
former targeted averaging provisions were inadequate because they
were (1) limited to a relatively small proportion of situations
and (2) unduly complicated. See id. at 644. Accordingly,
Revenue Act of 1964, Pub. L. 88-272, sec. 232(a), 78 Stat. 19,
105 replaced the old provisions (subject to transitional relief)
with an averaging device that was available to individual
taxpayers generally, regardless of the source of income. See id.
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