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amount that includes that portion of recovery that constitutes
the attorney’s contingent fee.
Gross income means all income from whatever source derived,
unless excluded by law. Sec. 61(a); Commissioner v. Glenshaw
Glass Co., 348 U.S. 426, 430 (1955). We find no such exclusion
in this case. The contingency fee portion of petitioners*
settlement is includable in their gross income, and the tax
consequences cannot be avoided by assignment of a portion of the
settlement to pay legal fees. See Commissioner v. Banks, supra;
Helvering v. Horst, 311 U.S. 112 (1940); Lucas v. Earl, 281 U.S.
111 (1930).
In summary, the Florida attorney lien law does not furnish a
basis for excluding the contingency fee portion of petitioners’
settlement from their gross income. Accordingly, we hold that
petitioners are to include in gross income the portion of the
settlement representing attorney’s fees in the amounts of
$106,644 and $100,000 for the taxable years 1998 and 1999,
respectively.
To reflect the foregoing,
An order and decision
will be entered for respondent.
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