Opinion by Judge NOONAN; Dissent by Judge McKEOWN
NOONAN, Circuit Judge:
James T. Sinyard and his wife Monique T. Sinyard (the Sinyards) appeal the judgment of the Tax Court determining a deficiency in their income tax for the taxable year 1992. At issue is the taxpayer’s liability for attorneys’ fees paid pursuant to court order approving the settlement of two class actions brought under the Age Discrimination in Employment Act (the ADEA), 29 U.S.C. § 621 et seq. Holding that such fees paid on the taxpayer’s behalf are income to the taxpayer, we affirm the judgment of the Tax Court.
FACTS
In the 1980’s James Sinyard was the division manager in Mobile, Alabama of IDS Financial Services, Inc. (IDS). In 1987, at the age of 49, he was allegedly forced to resign. In March 1989, Sinyard joined two class action suits against IDS alleging age discrimination and other torts. Sinyard entered into an agreement with class action counsel, Winthrop & Wein-stine, providing: “In the event of a recovery, Winthrop & Weinstine will be paid one third (jé) of the amount you obtain in the lawsuit, whether by settlement or jury award.”
In April 1990, the Equal Employment Opportunity Commission (the EEOC) intervened. In 1992, the suits were settled. IDS agreed to pay $35 million “in full and complete settlement of all claims as described in this Agreement and the exhibits hereto”; the payment was to be made “to the 32 individual plaintiffs, Mervyn Taylor, and Winthrop & Weinstine, P.A., their- attorneys.” After deducting costs and disbursements of $1.7 million the 32 individual plaintiffs agreed to allocate one-third of the remaining total settlement amount as compensation for tort injuries to the plaintiffs, to allocate one-third of the settlement amount as compensation for lost wages, and to “allocate one-third of the settlement amount for payment of attorneys’ fees pursuant to 29 U.S.C. § 626(b) and 29 U.S.C. § 216(b).” IDS agreed to pay the attorneys’ fees plus amounts allocated to legal costs and disbursements “directly to Winthrop & Weinstine, P.A., or to an account designated by them.” IDS agreed to withhold federal and state income taxes on the one-third of the settlement which was allocated as compensation for lost wages.
IDS also agreed to undertake various measures to ensure its compliance with the ADEA, such as training sessions for all managers and supervisors, and to make regular reports to the EEOC as to any division manager who resigned, retired, had been demoted or had been terminated. IDS agreed to instruct all IDS personnel about the importance of avoiding age discrimination and, in particular, to avoid the use of such code words as “new blood” or “young turks” on the one hand, or “over the hill” or “behind the times,” on the other. The settlement agreement was contingent upon approval by the court.
On August 26, 1992, the federal district court in which the suits were pending approved the settlement and issued the order drafted by the parties allocating one-third [758]*758of the settlement to “attorneys’ fees recoverable pursuant to 29 U.S.C. § 626(b) and 29 U.S.C. § 216(b),” to be paid directly without withholding for taxes, to Winthrop & Weinstine.
In accordance with the settlement, the proceeds were allocated as follows:
Total settlement payment $35,000,000
Less costs and disbursements $ 1,500,000
Net settlement proceeds $33,500,000
Allocation of net settlement proceeds:
Attorneys’ fees (¡6) $11,166,666.65
Tort damages $12,616,666.70
Lost wages $11,166,666.65
IDS issued a single check to Winthrop & Weinstine for $23,783,333.36, the sum of the tort damages and the attorneys’ fees. The check was deposited in a trust account on behalf of the class action plaintiffs.
PROCEEDINGS
The Commissioner of Internal Revenue assessed a deficiency in the Sinyards’ 1992 tax return. They petitioned the Tax Court to deny the deficiency. The case was tried on stipulated facts. October 7, 1998 the Tax Court sustained the Commissioner, holding that payment of a portion of the legal fees to Winthrop & Weinstine had satisfied an obligation of James Sinyard.
The amount received in settlement by him that is not now in dispute was as follows:
$ 273,673 taxable back wages
164,144 taxable tort damages
109,429 nontaxable personal injury damages
$ 547,146
In addition, legal fees and costs of $63,152 were allocated to the nontaxed personal injury damages and by agreement with the Commissioner excluded from income.
The Commissioner maintains that $252,608 in attorneys’ fees should be treated as income to the Sinyards. The Commissioner held this amount allowable as a miscellaneous itemized deduction. This deduction was reduced by 2% of Adjusted Gross Income, leaving a deduction of $240,984 for the attorneys’ fees. The full amount of this deduction could not be taken because the Sinyards’ income was subject to the Alternative Minimum Tax (the AMT). The result was the deficiency upheld by the Tax Court.
The Sinyards appeal.
ANALYSIS
If A owes B a debt, and C pays the debt on A’s behalf, it is elementary that C’s payment is income to A as well as to B. Here, James Sinyard had contracted to pay Winthrop & Weinstine one-third of what he might receive in settlement. His obligation to the law firm was satisfied by IDS. The payment was therefore income to him. “The discharge by a third person of an obligation to him is equivalent to receipt by the person taxed.” Old Colony Trust Co. v. Commissioner, 279 U.S. 716, 729, 49 S.Ct. 499, 73 L.Ed. 918 (1929).
The Sinyards maintain their case is different. It is one where A owes B but C is liable to B for the same debt and indeed is primarily liable. When C satisfies his obligation to B, C’s payment arguably should not be treated as income to A. In the present case, IDS became liable to pay the attorneys’ fees. It did so by virtue of the order of the court confirming the settlement and ordering IDS to perform according to its terms. IDS became primarily liable for the debt to Winthrop & Wein-stine. When IDS discharged the debt it was bound to pay, the Sinyards say they received no income.
The Sinyards have scoured the reports to find cases supporting their contention. What they have found, for example, are a corporation’s arrangement to make payments to preserve its franchise, Tucker v. Commissioner, 226 F.2d 177 (8th Cir.1955); a trust, in lieu of alimony, Stern v. [759]*759Commissioner, 137 F.2d 43
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Opinion by Judge NOONAN; Dissent by Judge McKEOWN
NOONAN, Circuit Judge:
James T. Sinyard and his wife Monique T. Sinyard (the Sinyards) appeal the judgment of the Tax Court determining a deficiency in their income tax for the taxable year 1992. At issue is the taxpayer’s liability for attorneys’ fees paid pursuant to court order approving the settlement of two class actions brought under the Age Discrimination in Employment Act (the ADEA), 29 U.S.C. § 621 et seq. Holding that such fees paid on the taxpayer’s behalf are income to the taxpayer, we affirm the judgment of the Tax Court.
FACTS
In the 1980’s James Sinyard was the division manager in Mobile, Alabama of IDS Financial Services, Inc. (IDS). In 1987, at the age of 49, he was allegedly forced to resign. In March 1989, Sinyard joined two class action suits against IDS alleging age discrimination and other torts. Sinyard entered into an agreement with class action counsel, Winthrop & Wein-stine, providing: “In the event of a recovery, Winthrop & Weinstine will be paid one third (jé) of the amount you obtain in the lawsuit, whether by settlement or jury award.”
In April 1990, the Equal Employment Opportunity Commission (the EEOC) intervened. In 1992, the suits were settled. IDS agreed to pay $35 million “in full and complete settlement of all claims as described in this Agreement and the exhibits hereto”; the payment was to be made “to the 32 individual plaintiffs, Mervyn Taylor, and Winthrop & Weinstine, P.A., their- attorneys.” After deducting costs and disbursements of $1.7 million the 32 individual plaintiffs agreed to allocate one-third of the remaining total settlement amount as compensation for tort injuries to the plaintiffs, to allocate one-third of the settlement amount as compensation for lost wages, and to “allocate one-third of the settlement amount for payment of attorneys’ fees pursuant to 29 U.S.C. § 626(b) and 29 U.S.C. § 216(b).” IDS agreed to pay the attorneys’ fees plus amounts allocated to legal costs and disbursements “directly to Winthrop & Weinstine, P.A., or to an account designated by them.” IDS agreed to withhold federal and state income taxes on the one-third of the settlement which was allocated as compensation for lost wages.
IDS also agreed to undertake various measures to ensure its compliance with the ADEA, such as training sessions for all managers and supervisors, and to make regular reports to the EEOC as to any division manager who resigned, retired, had been demoted or had been terminated. IDS agreed to instruct all IDS personnel about the importance of avoiding age discrimination and, in particular, to avoid the use of such code words as “new blood” or “young turks” on the one hand, or “over the hill” or “behind the times,” on the other. The settlement agreement was contingent upon approval by the court.
On August 26, 1992, the federal district court in which the suits were pending approved the settlement and issued the order drafted by the parties allocating one-third [758]*758of the settlement to “attorneys’ fees recoverable pursuant to 29 U.S.C. § 626(b) and 29 U.S.C. § 216(b),” to be paid directly without withholding for taxes, to Winthrop & Weinstine.
In accordance with the settlement, the proceeds were allocated as follows:
Total settlement payment $35,000,000
Less costs and disbursements $ 1,500,000
Net settlement proceeds $33,500,000
Allocation of net settlement proceeds:
Attorneys’ fees (¡6) $11,166,666.65
Tort damages $12,616,666.70
Lost wages $11,166,666.65
IDS issued a single check to Winthrop & Weinstine for $23,783,333.36, the sum of the tort damages and the attorneys’ fees. The check was deposited in a trust account on behalf of the class action plaintiffs.
PROCEEDINGS
The Commissioner of Internal Revenue assessed a deficiency in the Sinyards’ 1992 tax return. They petitioned the Tax Court to deny the deficiency. The case was tried on stipulated facts. October 7, 1998 the Tax Court sustained the Commissioner, holding that payment of a portion of the legal fees to Winthrop & Weinstine had satisfied an obligation of James Sinyard.
The amount received in settlement by him that is not now in dispute was as follows:
$ 273,673 taxable back wages
164,144 taxable tort damages
109,429 nontaxable personal injury damages
$ 547,146
In addition, legal fees and costs of $63,152 were allocated to the nontaxed personal injury damages and by agreement with the Commissioner excluded from income.
The Commissioner maintains that $252,608 in attorneys’ fees should be treated as income to the Sinyards. The Commissioner held this amount allowable as a miscellaneous itemized deduction. This deduction was reduced by 2% of Adjusted Gross Income, leaving a deduction of $240,984 for the attorneys’ fees. The full amount of this deduction could not be taken because the Sinyards’ income was subject to the Alternative Minimum Tax (the AMT). The result was the deficiency upheld by the Tax Court.
The Sinyards appeal.
ANALYSIS
If A owes B a debt, and C pays the debt on A’s behalf, it is elementary that C’s payment is income to A as well as to B. Here, James Sinyard had contracted to pay Winthrop & Weinstine one-third of what he might receive in settlement. His obligation to the law firm was satisfied by IDS. The payment was therefore income to him. “The discharge by a third person of an obligation to him is equivalent to receipt by the person taxed.” Old Colony Trust Co. v. Commissioner, 279 U.S. 716, 729, 49 S.Ct. 499, 73 L.Ed. 918 (1929).
The Sinyards maintain their case is different. It is one where A owes B but C is liable to B for the same debt and indeed is primarily liable. When C satisfies his obligation to B, C’s payment arguably should not be treated as income to A. In the present case, IDS became liable to pay the attorneys’ fees. It did so by virtue of the order of the court confirming the settlement and ordering IDS to perform according to its terms. IDS became primarily liable for the debt to Winthrop & Wein-stine. When IDS discharged the debt it was bound to pay, the Sinyards say they received no income.
The Sinyards have scoured the reports to find cases supporting their contention. What they have found, for example, are a corporation’s arrangement to make payments to preserve its franchise, Tucker v. Commissioner, 226 F.2d 177 (8th Cir.1955); a trust, in lieu of alimony, Stern v. [759]*759Commissioner, 137 F.2d 43 (2d Cir.1943); and a corporation’s settlement of a suit also affecting the taxpayer, Ruben v. Commissioner, 97 F.2d 926 (8th Cir.1938). These cases rest on facts peculiar to themselves, in contexts very different from that provided by a fee-shifting statute. Although, as the Sinyards note, there are several hundred such statutes enacted by Congress, they present no precedent where the shift of the obligation to pay the lawyer from the lawyer’s client to the defendant has relieved the client from the constructive receipt of income when his obligation to the lawyer is satisfied.
Indeed, the Sinyards’ arguments are contrary to prior case law and the plain language of the ADEA statute. Under the ADEA, attorney’s fees are available to prevailing plaintiffs, not to plaintiffs counsel. 29 U.S.C. § 626(b) (expressly incorporating provisions pertaining to attorney’s fees under the Fair Labor Standards Act, 29 U.S.C. § 216(b)); see Evans v. Jeff D., 475 U.S. 717, 730-32, 106 S.Ct. 1531, 89 L.Ed.2d 747 (1986) (holding that while Congress expected fee shifting to attract competent counsel to represent citizens deprived of their civil rights, it did not bestow fee awards upon attorneys). As the Supreme Court held in a civil rights case brought under 42 U.S.C. § 1988, “it is the party, rather than the lawyer” who is eligible for fees under the fee-shifting statute. Venegas v. Mitchell, 495 U.S. 82, 87, 110 S.Ct. 1679, 109 L.Ed.2d 74 (1990); Gilbrook v. City of Westminster, 177 F.3d 839, 874-75 (9th Cir.1999) (recognizing that fee awards belong to the prevailing party under civil rights statute, 42 U.S.C. § 1988); Image Tech, Serv., Inc. v. Eastman Kodak Co., 136 F.3d 1354, 1357 (9th Cir.1998) (holding that attorney fees awarded under the Clayton Act should be paid to the successful party itself).
In our case, the Sinyards bound themselves to pay Winthrop & Weinstine one-third of what they received. When IDS satisfied this obligation, the Sinyards were so much the richer. That they never laid hands on the money paid to the lawyers does not obliterate their constructive receipt. The Sinyards are therefore liable for the deficiency resulting from the workings of the AMT. Benci-Woodward v. Commissioner, 219 F.3d 941 (9th Cir.2000), cert denied, 531 U.S. 1112, 121 S.Ct. 855, 148 L.Ed.2d 770 (2001); Coady v. Commissioner, 213 F.3d 1187 (9th Cir.2000), cert. denied, — U.S. -, 121 S.Ct. 1604, 149 L.Ed.2d 470 (2001).
The Sinyards suggest that the ADEA is different from many fee-shifting statutes. The legislative history of the ADEA shows an intent to make the plaintiffs whole. The Fair Labor Standards Act remedy incorporated into the ADEA requires a judgment for the plaintiff to provide for attorneys’ fees “in addition” to damages. 29 U.S.C. § 216(b).
These observations do not alter the analysis of the tax law. The ADEA does make the injured plaintiff whole. The attorneys’ fees are in addition to compensation for what he lost. The tax impact of the attorneys’ fees arises from the Alternative Minimum Tax. Without its limitation, the attorneys’ fees would be income to the Sinyards, and the income would be wiped out by deduction of the total received. It would be a wash. The anomalous result, no doubt unintended, arises when part of the deduction is blocked by the AMT. We do not think we can change the basic rules of income tax in order to correct this result. See Benci-Woodward, 219 F.3d at 944.
The Sinyards have two fallback arguments. The first is that James Sinyard was a resident of Alabama when he made the contract with the law firm. Under [760]*760Alabama law a contingent fee agreement establishes a lawyer’s lien on the recovery, and the fee has been held to be not income to the taxpayer. Cotnam v. Commissioner, 263 F.2d 119, 125 (5th Cir.1959). We do not dispute the old Fifth Circuit’s statement of Alabama law, but we do not see how the existence of a hen in favor of the taxpayer’s creditor makes the satisfaction of the debt any less income to the taxpayer whose obligation is satisfied. Like the Tax Court, we decline to follow Cotnam.
The Sinyards’ second argument is the settlement achieved more than money damages from the individual plaintiffs. As private attorneys general the plaintiffs reformed the practice and culture of IDS. The lion’s share of the lawsuit was work done by the counsel they brought into the case. Hence, some of the attorneys’ fees should not be allocated to the individual plaintiffs. The argument has two weaknesses. First, it ignores the EEOC’s part in the settlement. Second, the contract between Sinyard and the law firm makes him liable for one-third of the fees without regard to what else beyond monetary damages is achieved.
It is possible that where monetary recovery is little or nonexistent in an ADEA case, the attorneys’ fee award would leave the taxpayer owing more tax than anything he received in his ADEA suit. This is not the Sinyards’ case. The remedy for such unfairness when it does occur lies with Congress specifically exempting ADEA damages as it has exempted personal injury damages; or the whole issue could be avoided by Congress redesigning the computation of the AMT to permit the full deduction of attorneys’ fees.
For the foregoing reasons, the judgment of the Tax Court is AFFIRMED.