- 33 -
Petitioner does not dispute that the $103,420 paid to
Universal for work done by petitioner must be taxed to the earner
of that income. Instead, petitioner asserts that for tax
purposes Universal should be considered to have earned that
income (i.e., was the “true earner” of the income).
We are therefore required to decide whether petitioner or
Universal is the proper party to be taxed on the $103,420
generated by petitioner’s work, but paid to Universal. In cases
similar to the case at hand, we have held that the taxable party
is the person or entity who directed and controlled the earning
of the income, rather than the person or entity who received the
income. See Vercio v. Commissioner, supra at 1253 (citing
Wesenberg v. Commissioner, 69 T.C. 1005 (1978); American Sav.
Bank v. Commissioner, 56 T.C. 828 (1971)); see also Commissioner
v. Sunnen, 333 U.S. 591, 604 (1948) (“The crucial question
remains whether the assignor retains sufficient power and control
over the assigned property or over receipt of the income to make
it reasonable to treat him as the recipient of the income for tax
purposes.”); Corliss v. Bowers, 281 U.S. 376, 378 (1930)
(revocable trust created by husband for benefit of wife and
children treated as invalid assignment of income; Supreme Court
stated that “taxation is not so much concerned with the
refinements of title as it is with actual command over the
property taxed * * *. * * * The income that is subject to a
Page: Previous 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 NextLast modified: May 25, 2011