Commissioner v. Banks
2005 United States Supreme Court case / From Wikipedia, the free encyclopedia
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Commissioner v. Banks, 543 U.S. 426 (2005), together with Commissioner v. Banaitis, was a case decided before the Supreme Court of the United States, dealing with the issue of whether the portion of a money judgment or settlement paid to a taxpayer's attorney under a contingent-fee agreement is income to the taxpayer for federal income tax purposes. The Supreme Court held when a taxpayer's recovery constitutes income, the taxpayer's income includes the portion of the recovery paid to the attorney as a contingent fee.[1] Employment cases are an exception to this Supreme Court ruling because of the Civil Rights Tax Relief in the American Jobs Creation Act of 2004.[2] The Civil Rights Tax Relief amended Internal Revenue Code § 62(a)[3] to permit taxpayers to subtract attorney's fees from gross income in arriving at adjusted gross income.[4]
Commissioner v. Banks | |
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Argued November 1, 2004 Decided January 24, 2005 | |
Full case name | Commissioner of Internal Revenue v. John W. Banks II Commissioner of Internal Revenue v. Sigitas J. Banaitis |
Citations | 543 U.S. 426 (more) 125 S. Ct. 826; 160 L. Ed. 2d 859 |
Case history | |
Prior |
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Holding | |
When a litigant's recovery constitutes income, the litigant's income includes the portion of the recovery paid to the attorney as a contingent fee. | |
Court membership | |
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Case opinion | |
Majority | Kennedy, joined by Stevens, O'Connor, Scalia, Souter, Thomas, Ginsburg, Breyer |
Rehnquist took no part in the consideration or decision of the case. | |
Laws applied | |
Internal Revenue Code |