- 73 - arrangements that, if successful, would be exploited by others. As a result, legislative and judicial countermeasures “have come to permeate the tax law so completely that they sometimes determine which of several parties to an ordinary business transaction must report a particular receipt or can deduct a liability.” Id. However, those observations don’t answer the question. They just remind us that the taxpayer’s arguments deserve strict scrutiny. I also acknowledge that the assignor’s lack of retained control may be trumped if the subject of the assignment is personal service income.44 Unlike the trust and property cases, Lucas v. Earl, supra, can be rationalized not so much on the service provider’s retained control over whether or not he works,45 “but on the more basic policy to ‘tax salaries to those who earned them’”.46 My response is that Mr. Kenseth’s claim did not generate personal service income. Even though the loss of past earnings 44 3 Bittker & Lokken, Federal Taxation of Income, Estates, and Gifts 75-7 (2d ed. 1991). 45 The Court of Appeals in Estate of Clarks v. United States, supra, misstates Lucas v. Earl, 281 U.S. 111 (1930), in saying that in that case, as in Helvering v. Horst, supra, “the income assigned to the assignee was already earned, vested and relatively certain to be paid to the assignor”. As a matter of fact, the assignment document in Lucas v. Earl had been executed in 1901, long before the effective date of the 16th Amendment; the taxable years in issue were 1920 and 1921. See Lucas v. Earl, supra at 113. 46 Bittker & Lokken, supra, at 75-11; see also Chirelstein, Federal Income Taxation 194-195, 214-216 (8th ed. 1999).Page: Previous 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 Next
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