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raised. See Estate of Horvath v. Commissioner, 59 T.C. 551, 556
(1973).
Even if petitioners had timely raised this issue, it is well
established that the person who earns or otherwise creates the
right to receive income is taxed. See Lucas v. Earl, 281 U.S.
111 (1930). The assignment of income doctrine requires
compensation to be taxed to the person who earns it regardless of
the anticipatory arrangements and contracts, however skillfully
devised. See Leavell v. Commissioner, 104 T.C. 140 (1995). AJCS
earned the income at issue even though it might have been
erroneously reported by others. Accordingly, AJCS may not reduce
its income by $2,680,500.
III. Workmen’s Compensation Insurance Expenses
Finally, we consider petitioners’ contention that AJCS is
entitled to deduct $269,815 in workmen’s compensation insurance
expenses for its 1993 tax year.
Section 162(a) allows a deduction for “all the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business”. Under section 6001 and
section 1.6001-1(a) and (b), Income Tax Regs., a taxpayer must
keep such permanent books of account or records as are sufficient
to establish the amount of gross income, deductions, credits, or
other matters required to be shown on the tax return.
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