•  
  •  
 

Washington Law Review

Abstract

In the 1995 case of Boccardo v. Commissioner, the Ninth Circuit changed the tax treatment of advances made by attorneys working on contingency fee arrangements. The court held that, in a specific type of contingency fee arrangement, costs paid by an attorney are deductible as ordinary and necessary business expenses. This decision not only challenges assumptions underlying decades of case law and centuries of legal ethical tradition, but it also undermines the tax accounting principle of matching expenses with related income. This Note summarizes the traditional rationales for prohibiting attorneys from deducting such costs and analyzes the Boccardo decision. The Note concludes that both the traditional tax approach to advances and the Ninth Circuit's approach are flawed and suggests an alternative: treating the expenditures as investments.

First Page

745

Share

COinS