- 4 -- 4 -
Johnston, without petitioner’s involvement.4 Accordingly, we
held that Mr. Johnston was the person who earned that $103,420
and that Mr. Johnston’s attempt to divert his personal service
income to petitioner was an ineffective “assignment of income”,
under the long line of authority beginning with Lucas v. Earl,
281 U.S. 111 (1930).5
Background
The record consists of a few exhibits and a limited amount
of testimony.
4 In Johnston v. Commissioner, T.C. Memo. 2000-315, we also
found that $1,341 of the $104,786 paid to petitioner was paid for
work done by Julia Ghavami (Ms. Ghavami). On July 27, 2000, the
Court entered an agreed decision that Ms. Ghavami has no
deficiency for 1993.
5 Our opinion in Johnston v. Commissioner, supra, issued on
Oct. 6, 2000, concerned Mr. Johnston’s income tax for 1993. The
Court has also redetermined Mr. Johnston’s income taxes for 1990-
92 and 1994-95, see Johnston v. Commissioner, docket No. 18619-99
(Johnston II), and acted on respondent’s motion to dismiss for
lack of jurisdiction with respect to the trust herein for 1994-
95, docket No. 18438-99. On Nov. 17, 2000, the Court entered a
decision for the Commissioner in Johnston II, pursuant to a bench
opinion rendered on Oct. 19, 2000. On Nov. 27, 2000, the Court
granted respondent’s motion and entered an order dismissing
docket No. 18438-99.
In Johnston II, the Court found that World Wide Mortgage
Corp. and other third parties made payments during 1990-92 and
1994-95 for work performed by Mr. Johnston; these payments were
deposited in Universal Trust’s bank account. The Court concluded
in Johnston II that this attempted diversion of Mr. Johnston’s
service income, like the diversion at issue in our earlier
Johnston opinion, was an “assignment of income” that would not be
recognized for Federal income tax purposes.
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