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assigned the contract;[24] otherwise it is he, not the
contract, or the assignee, that is producing the
contractual income--it is his income, and he is just
shifting it to someone else in order to avoid paying
income tax on it. To state the point differently, an
anticipatory assignment of income, that is, an
assignment of income not yet generated, as distinct
from the assignment of an income-generating contract or
property right, does not shift the tax liability from
the assignor’s shoulders, Helvering v. Horst, 311 U.S.
112, * * * (1940); Boris I. Bittker et al., Federal
Income Taxation of Corporations and Shareholders � 7.07
(4th ed. 1979), unless, as we said, the duty to produce
the income is assigned also, so that the assignor is
out of the income-producing picture. In Lucas v. Earl,
[281 U.S. 111 (1930)] where the taxpayer had assigned
an interest in his future income to his wife, the
[Supreme] Court held that when the income came in, it
was his income, because it was generated by his
efforts, including his decisions about what to charge
for his services and what expenses to incur. See also
Commissioner v. Sunnen, 333 U.S. 591, 608-10, * * *
(1948); Greene v. United States, supra, 13 F.3d at 582.
Similarly, the income on the contract with ADIA [the S
corporation’s client] was generated by the exertions of
Inc. [the S corporation], not of Ltd. [ the Bermuda
offshore corporation]
The Court of Appeals also explained that the taxpayer’s position
in that case was weak because, among other things, the Bermuda
offshore corporation was the taxpayer’s alter ego and it was
doubtful whether there ever was any assignment of the contract to
the Bermuda offshore corporation. Id. at 920.
24Income the assignor had already earned would be recognized
by and taxed to the assignor under the assignment of income
doctrine. Helvering v. Eubank, 311 U.S. 122 (1940); Schneer v.
Commissioner, 97 T.C. 643, 648 (1991).
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