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IV. Assignment of Income
Although we have concluded that Taxman and WFIC should be
recognized as separate entities, WFIC’s real estate commission
income during the years at issue may nonetheless be taxable to
petitioner under section 61 and the assignment of income
doctrine. See Haag v. Commissioner, 88 T.C. 604, 610 (1987),
affd. without published opinion 855 F.2d 855 (8th Cir. 1988). A
taxpayer may not assign income to a corporation with real and
substantial business activity to avoid tax liability. Wilson v.
United States, 530 F.2d 772, 778 (8th Cir. 1976). Two
requirements must be fulfilled in order for a corporation, rather
than its service-performer employee, to be considered the earner
of the income and taxable thereon:
First, the service-performer employee must be just
that--an employee of the corporation whom the
corporation has the right to direct or control in some
meaningful sense. Second, there must exist between the
corporation and the person or entity using the services
a contract or similar indicium recognizing the
corporation’s controlling position. [Citations and fn.
ref. omitted.]
Johnson v. Commissioner, 78 T.C. 882, 891 (1982), affd. without
published opinion 734 F.2d 20 (9th Cir. 1984).
Respondent argues that petitioner should have included on
his personal tax returns the real estate commissions paid to WFIC
during 1990, 1991, 1992, and 1993 because petitioner was the true
earner of those commissions. Petitioner argues that WFIC earned
the real estate commissions. Petitioner has the burden of proof
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