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deductions should have been reported and claimed on petitioner’s
individual return because: Petitioner sold real estate for and
received commissions from O’Brien; all payments were made to
petitioner in her name and were either deposited in her
individual bank accounts or endorsed by her; and petitioner did
not receive a salary from Sams, Inc. during the year at issue.
We consider whether the gross receipts were properly
allocated by respondent and are taxable to petitioner under
either the assignment of income doctrine and section 61 or under
section 482, the regulations, and the case law thereunder.5
Gross income includes all income from whatever source
derived. Sec. 61(a). Under the assignment of income doctrine
and section 61, salaries, fees, and compensation are taxed to
those who earned them. United States v. Basye, 410 U.S. 441, 447
(1973); Leavell v. Commissioner, 104 T.C. 140, 149 (1995) (citing
Lucas v. Earl, 281 U.S. 111, 114-115 (1930)). The application of
the assignment of income doctrine requires an analysis of who
controlled the earning of income and who is the employer.
5 We note that respondent has not alleged that the gross
receipts should be allocated under sec. 269A. The application of
sec. 269A to a personal service corporation (PSC) requires a
finding that the principal purpose for forming or availing of
that PSC is the avoidance or evasion of income tax by reducing
income or securing the benefit of an expense, deduction, credit,
exclusion, or other allowance for any employee-owner which would
not otherwise be available. Sec. 269A(a). There are no facts in
the record that would lead us to conclude that petitioner’s
principal purpose for incorporating Sams, Inc. was avoidance or
evasion of income tax. Therefore, sec. 269A is inapplicable.
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