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[An] entity earning the income--whether a
partnership or an individual taxpayer--cannot avoid
taxation by entering into a contractual arrangement
whereby that income is diverted to some other person or
entity. Such arrangements, known to the tax law as
"anticipatory assignments of income," have frequently
been held ineffective as means of avoiding tax
liability. * * *
United States v. Basye, 410 U.S. 441, 449-450 (1973); Caruth
Corp. v. United States, 865 F.2d 644, 648 (5th Cir. 1989) (one
who earns income cannot escape tax upon the income by assigning
it to another).
"[I]f one, entitled to receive at a future date * * *
compensation for services, makes a grant of it by anticipatory
assignment, he realizes taxable income as if he had * * *
received the salary and then paid it over." Commissioner v. P.G.
Lake, Inc., 356 U.S. 260, 267 (1958). "One need not personally
receive the taxable benefits provided one has the power to
determine the recipient. United States v. Basye, 410 U.S. 441."
Saunders v. Commissioner, 720 F.2d 871, 873 (5th Cir. 1983),
affg. T.C. Memo. 1992-655.
An individual cannot escape tax on income to which he is
entitled by "turning his back" upon that income. If he has
received the income or had a right to receive the income, he is
taxable thereon. See Teschner v. Commissioner, 38 T.C. 1003,
1009 (1962).
Petitioner argues that he sold property to AKG and is no
longer liable for tax on the income from that property. State
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