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subvert this principle by deflecting income away from its true
earner to another entity through contractual arrangements,
however drafted, are not recognized as dispositive for Federal
income tax purposes. Id. at 114-115; Vercio v. Commissioner, 73
T.C. 1246, 1253 (1980). The Supreme Court has referred to this
assignment of income rule as “the first principle of income
taxation”, Commissioner v. Culbertson, 337 U.S. 733, 739 (1949),
and “a cornerstone of our graduated income tax system”, United
States v. Basye, 410 U.S. 441, 450 (1973).
Petitioner does not dispute that the amount paid to Salt
Creek Services for work performed must be taxed to the earner of
the income. Instead, petitioner asserts that for tax purposes,
Salt Creek Services should be considered to have earned the
income (i.e., was the “true earner” of the income) for the years
at issue because of the assignment. However, petitioner, not
Salt Creek Services, was entitled to receive the commissions from
Bankers United. The agency agreement was between petitioner and
Bankers United. Moreover, the record does not contain any
evidence showing an agreement existed between petitioner and Salt
Creek Services. Lastly, outside of his assertions, petitioner
produced no evidence showing Salt Creek Services actually
existed.
Accordingly, the Court concludes the assignment to Salt
Creek Services was ineffectual to shift the tax burden away from
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