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the proceeds or income from an activity. Although section
301.7701-1(a)(2), Proced. & Admin. Regs., provides that certain
joint undertakings may give rise to entities for federal tax
purposes “if the participants carry on a trade, business,
financial operation, or venture and divide the profits
therefrom,” the examples that follow illustrating such
arrangements, also distinguish them from mere joint undertakings
to share expenses or arrangements by sole owners or tenants in
common to rent or lease property, such as cropsharing
arrangements.
One way to think of the contingent fee agreement, which
brings us back to the metaphor about fruits and trees, is to
analogize it to a cropsharing arrangement.64 Cropsharing is
strikingly similar to the contingent fee agreement. The attorney
is in the position of the tenant farmer, who bears all his direct
and overhead expenses incurred in earning the contingent fee (and
64 To adopt another agricultural metaphor, a claim, lawsuit,
or cause of action is, see Compact Oxford English Dictionary 1838
(1971), a “monocarp”, “a plant that bears fruit but once * * *.
Annuals and biennials, which flower the first or second year and
die, as well as the Agave, and some palms which flower only once
in 40 or 50 years and perish, are monocarpic. * * * The plant
itself is also completely exhausted, all its disposable formative
substances are given up to the seed and the fruit, and it dies
off (monocarpous plants)”. So the unsuccessful lawsuit dies off
without bearing fruit, but, with the successful husbandry of an
attorney who has entered into a contingent fee agreement with the
client, the lawsuit may come to fruition in a recovery, which is
shared by the client and attorney under the terms of the
agreement.
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