-326-
1 The $12,711 amount listed in the STJ report is erroneous.
See Exh. 9123.
Hi-Chicago Trust, on its income tax returns for fiscal years
ending February 28, 1981, through February 28, 1984, claimed
deductions with respect to the above payments to THC. On the
trust’s return for fiscal year ending February 28, 1981, the
payment to THC was characterized as “fiduciary fees”. On the
trust’s return for the fiscal year ending February 28, 1982, the
payments to THC were characterized as “participation fees”. On
the trust’s returns for its fiscal years ending February 28,
1983, and February 28, 1984, the payments to THC were claimed,
respectively, as “commissions” and “commissions expenses”. The
trust claimed no deductions for fiduciary fees on its 1982, 1983,
and 1984 fiscal year returns. Kanter, as the trust’s trustee,
signed the trust’s 1981, 1982, 1983, and 1984 fiscal year
returns.
OPINION
A. The Assignment of Income Doctrine
In United States v. Basye, 410 U.S. at 450, the Supreme
Court reiterated the longstanding principle that income is taxed
to the person who earns it, stating: “The principle of Lucas v.
Earl [281 U.S. at 115], that he who earns income may not avoid
taxation through anticipatory arrangements no matter how clever
or subtle, has been repeatedly invoked by this Court and stands
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