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include the entire recovery in the client’s income and to
relegate the client to a deduction that is not fully usable.
I am in complete agreement with Judges Rives and Brown and
the panel in Estate of Clarks that the assignment of income
doctrine should not apply to contingent fee agreements. A
contingent fee agreement is not an intrafamily donative
transaction, or even a transaction within an economic family,
such as parent-subsidiary, see United Parcel Serv. of Am., Inc.
v. Commissioner, T.C. Memo. 1999-268, or the doctors’ service
partnership and related HMO in United States v. Basye, 410 U.S.
441 (1973). Notwithstanding the attorneys’ fiduciary
responsibilities to their client, a contingent fee agreement is a
commercial transaction between parties with no preexisting common
interest that sharply reduces or eliminates the client’s dominion
and control over both the cause of action and any recovery. Our
decisions distinguishing (or just not following) the decision of
the Court of Appeals in Cotnam v. Commissioner, supra, have not
adequately considered the characteristics of contingent fee
agreements or the effect those characteristics should have in
deciding whether such agreements should be treated as assignments
of income to be disregarded for Federal income tax purposes.
I now address the points of the Court of Appeals for the
Sixth Circuit in Estate of Clarks v. United States, supra, that
go beyond the points of Judges Rives and Brown in Cotnam v.
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