Taxing Contingent Attorneys' Fees: Many Courts are Getting it Wrong

Posted: 9 Nov 2000

See all articles by Gregg D. Polsky

Gregg D. Polsky

University of Georgia School of Law

Abstract

In this report, Polsky addresses the controversial issue of whether the contingent attorneys' fee portion of a taxable recovery is included in, or excluded from, the claimant's gross income.

Several courts have concluded that the contingent fee portion is excluded from the claimant's gross income. In reaching their conclusions, these courts determined that contingent fee arrangements operate to transfer a portion of the claimant's claim to the attorney for tax purposes. Polsky concludes that these courts erroneously neglected to apply section 83 to this transfer. Had they applied section 83, he contends, these courts would have concluded that the contingent fee portion must be included in the claimant's gross income.

Suggested Citation

Polsky, Gregg D., Taxing Contingent Attorneys' Fees: Many Courts are Getting it Wrong. Tax Notes, November 13, 2000. Available at SSRN: https://ssrn.com/abstract=249433

Gregg D. Polsky (Contact Author)

University of Georgia School of Law ( email )

225 Herty Drive
Athens, GA 30602
United States

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