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WASHINGTON � The U.S. Tax Court recently ruled that the lead, court-appointed attorney for the defense of Oklahoma City bomber Timothy McVeigh could not take a nearly $300,000 tax deduction for the charitable donation of McVeigh defense files because he did not own them under Oklahoma law. Stephen Jones of Jones, Otjen & Davis in Enid, Okla., represented McVeigh from May 1995 until his withdrawal from the case in August 1997. McVeigh was executed for the April 1995 bombing of the Alfred P. Murrah Federal Building in Oklahoma City. During his representation, Jones acquired 171 boxes of documents, computer disks, audio and video cassettes and other materials. Most were copies of investigative reports by the federal government, and copies had been provided as well to state and local prosecuting authorities. On the day he was allowed to withdraw from McVeigh’s defense, Jones, according to the court, contacted the University of Texas at Austin to propose donation of the materials. A deed later was executed for transfer of the documents to the university’s Center for American History. In May 1998, Jones hired someone to appraise the value of the collection for the purpose of a charitable-contribution deduction. The court said the appraiser spent only one day reviewing a small portion of the collection. “Although he discounted his preliminary value assessment by 50 percent because none of the materials were originals,” the Tax Court said, the appraiser did not take into consideration that multiple copies of the materials had been distributed to various attorneys during the course of the underlying trial. Who owns it? Jones claimed a charitable deduction of $294,877 on a joint federal income tax return for 1997. But the Internal Revenue Service disallowed the deduction after deciding that Jones did not personally own the materials. In applying federal tax law, state law determines the nature of the taxpayer’s legal interest in property, according to the court. But the ownership of client files, said the court, was apparently an issue of first impression under Oklahoma law. The Tax Court canvassed other courts’ treatment of ownership of client files. The majority of courts, it said, hold that clients are the legal owners of their entire case files, including the attorney’s work product for which the client paid when he purchased the attorney’s services. But some courts, it added, have held that ownership is divided: the attorney’s work product remains his or her property, but the end product of the attorney’s representation � such as finalized legal documents � belong to the client. “The materials in issue in this case fall outside of this work product exception,” the court wrote. “Thus, under either approach, the documents in issue in this case belong properly to petitioner’s client, McVeigh, and not to petitioner. Petitioner, in effect, was merely the authorized and incidental custodian of the copies in issue and had no ownership rights sufficient to effect a gift or support a charitable contribution deduction.” Jones v. CIR, 129 T.C. 16. Oklahoma Rules of Professional Conduct, added the court, generally imply that clients have ownership rights in their case files. The court rejected Jones’ “implicit argument” that an attorney’s right to maintain a copy of his client’s file after termination of representation includes a right to publicize, sell or otherwise dispose of the case file to the attorney’s benefit. And, because the materials contained “merely copies” of documents and other items in the possession of many different people, the court said it had “serious doubts” about the value assigned to them by the appraiser. Jones’ tax counsel, Clarke L. Randall of Oklahoma City’s Kornfeld Franklin Renegar & Randall, declined to comment.

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