- 4 - [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. StatePage: Previous 1 2 3 4 5 6 7 Next
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