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Gross income means all income from whatever source derived,
including compensation for services, including fees, commissions,
and similar items. See sec. 61(a)(1). Compensation for services
is an item of gross income that cannot be effectively assigned to
escape the burden of taxation. See Lucas v. Earl, 281 U.S. at
114-115. This Court has upheld reallocations of income from a
validly organized and operated corporation to its
shareholder/employee under the assignment of income doctrine.
See Bagley v. Commissioner, 85 T.C. 663 (1985), affd. 806 F.2d
169 (8th Cir. 1986); Askew v. Commissioner, T.C. Memo. 1985-100,
affd. 805 F.2d 830 (8th Cir. 1986). Respondent cites DeVaughn v.
Commissioner, T.C. Memo. 1983-712, as an example of a similar
situation in which the assignment of income doctrine was applied
to tax kickback payments to an individual taxpayer who had earned
the payments but sought to redirect them to that taxpayer's
corporation.
In cases involving viable corporations, we consider all the
facts and circumstances to determine the actual earner of income.
See Schuster v. Commissioner, 800 F.2d 672 (7th Cir. 1986), affg.
84 T.C. 764 (1985); Fogarty v. Commissioner, 780 F.2d 1005 (Fed.
Cir. 1986), affg. 6 Cl. Ct. 612 (1984); Leavell v. Commissioner,
104 T.C. 140, 155 (1995). In determining the proper taxpayer, we
consider which person or entity controls the earning of the
income, such as:
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