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In the present matter, the parties do not contest these
basic propositions but differ as to whether any portion of the
purchase price received by the trust can be attributed and taxed
to petitioners on the grounds of a covenant not to compete.
Because all payments flowing from the sale of the Little Rascals
business were made directly to the trust, and because respondent
does not contend that the trust failed to satisfy the
requirements set forth in section 664 for the creation of a valid
charitable remainder unitrust, resolution of this question turns
on whether petitioners can be said to have actually earned
income, which they anticipatorily assigned to the trust, by
reason of a promise not to compete.
The principle that substance should govern over form is well
established in tax law. See, e.g., Higgins v. Smith, 308 U.S.
473, 477 (1940); Turner Broad. Sys., Inc. & Subs. v.
Commissioner, 111 T.C. 315, 326 (1998); Palmer v. Commissioner,
62 T.C. 684, 691 (1974), affd. 523 F.2d 1308 (8th Cir. 1975). A
corollary to this principle is the assignment of income theory,
under which mere assignment of a right to receive income is
insufficient to insulate the assignor from tax liability. See,
e.g., Commissioner v. Sunnen, 333 U.S. 591, 604 (1948); Lucas v.
Earl, 281 U.S. 111, 114-115 (1930); Palmer v. Commissioner, supra
at 692. The true earner of income must bear the tax
consequences. See, e.g., Commissioner v. Sunnen, supra at 604;
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