Green

MEMORANDUM *

*930 We agree with the tax court that Marcia Green is required to pay income tax on statutory attorneys’ fees awarded under the California Fair Employment and Housing Act (“FEHA”). Although factually different, the reasoning of Sinyard v. Commissioner, 268 F.3d 756 (9th Cir.2001), controls the outcome in this case. Sinyard had a contingency-fee agreement with his counsel and later settled his case, allocating a third of the settlement for payment of statutory attorneys’ fees pursuant to 29 U.S.C. § 626 (b). Id. at 757 . This court reasoned that the payment by the employer to the attorney satisfied Sin-yard’s contractual obligation and thus was income to Sinyard as a discharge of indebtedness. Id. at 758-59 .

Here, Green either (1) had a de facto contingency fee arrangement with Mr. Faust to pay him forty percent of her recovery (as the tax court found), or (2) in the absence of an agreement, was deemed under California law “to have promised to pay the attorney the reasonable value of the services performed in his behalf and with his consent and knowledge.” Flan-nery v. Prentice, 26 Cal.4th 572, 589 , 110 Cal.Rptr.2d 809 , 28 P.3d 860 (2001) (internal quotations and…