Kochansky v. Commissioner

Richard Kochansky (plaintiff) represented a client in a 1983 malpractice claim for a contingent fee based on a percentage of any recovery. When Kochansky divorced his wife in 1985, the settlement gave her a one-half interest in that future contingent fee. The client paid the fee in 1987, and Kochansky paid his ex-wife her half under the divorce agreement, but reported and paid tax only on his own half. The commissioner (defendant) assessed a deficiency, concluding Kochansky owed tax on the entire fee. The tax court agreed with the commissioner, and Kochansky appealed.