- 20 - Woodward v. Commissioner, 219 F.3d 941 (9th Cir. 2000), affg. T.C. Memo. 1998-395. In that case, the court held that an award of punitive damages was fully includable in the taxpayers' gross income, notwithstanding the fact that a portion of the award was retained by the taxpayers' attorney, pursuant to a contingent fee agreement. Id. The Court of Appeals noted that under California law, the law applicable in that case and in the instant case, "an attorney lien does not confer any ownership interest upon attorneys or grant attorneys any right and power over the suits, judgments, or decrees of their clients." Id. at 943; see also Brewer v. Commissioner, T.C. Memo. 1997-542 (attorney's fees paid with respect to action for statewide discrimination in California), affd. without published opinion 172 F.3d 875 (9th Cir. 1999). Accordingly, the Court of Appeals found no reason to distinguish the payment to the taxpayers' attorney under the contingent fee agreement in that case from the attorneys' fees at issue in Coady v. Commissioner, 213 F.3d 1187 (9th Cir. 2000), affg. T.C. Memo. 1998-291. In Coady v. Commissioner, supra, the Court of Appeals for the Ninth Circuit rejected a taxpayer's argument that a judgment for lost wages and benefits arising out of her wrongful termination should be reduced by contingent legalPage: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Next
Last modified: May 25, 2011