- 10 -
gives rise to income by way of a sale.” Humacid Co. v.
Commissioner, 42 T.C. 894, 913 (1964); see also Carrington v.
Commissioner, 476 F.2d 704, 708 (5th Cir. 1973), affg. T.C. Memo.
1971-222; Campbell v. Prothro, 209 F.2d 331 (5th Cir. 1954).
However, it is equally well established that the incidence of
taxation depends on the substance rather than the form of a
transaction. Commissioner v. Court Holding Co., 324 U.S. 331,
334 (1945); Crenshaw v. United States, 450 F.2d 472, 475 (5th
Cir. 1971). To that end, the Commissioner has used a number of
doctrines as a basis for recharacterizing a purported gift of
appreciated property, including the anticipatory assignment of
income doctrine, e.g., Ferguson v. Commissioner, 108 T.C. 244
(1997), affd. 174 F.3d 997 (9th Cir. 1999), the step transaction
doctrine, e.g., Blake v. Commissioner, T.C. Memo. 1981-579, affd.
697 F.2d 473 (2d Cir. 1982), and the sham transaction doctrine,
e.g., Caruth Corp. v. United States, 865 F.2d 644 (5th Cir.
1989). He invokes the anticipatory assignment of income doctrine
as the basis for his recharacterizing the purported gifts of
stock warrants in this case.
1. Anticipatory Assignment of Income Doctrine
The general principles underlying the assignment of income
doctrine are well established. It taxes income “to those who
earn or otherwise create the right to receive it and enjoy the
benefit of it when paid.” Helvering v. Horst, 311 U.S. 112, 119
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011