- 53 -
Lucas v. Earl, supra; Leavell v. Commissioner, 104 T.C. 140
(1995). The Supreme Court's articulation of the assignment of
income doctrine requires no challenge to the separate existence
of the persons or entities to which the doctrine applies. As the
Court stated:
The 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, supra at
449-450.]
Therefore, the issue we must decide is whether petitioner, rather
than NUF and OPL, earned the EVC's.
During the years prior to 1984, petitioner properly reported
revenues from EVC's as income for Federal income tax purposes.
During those years petitioner performed the following EVC
functions and activities:
1. Maintained and advertised the shipping activity,
which provided a customer base for petitioner's
excess value activity.
2. Printed shipping forms with an excess value election.
3. Published excess value rates in tariffs.
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