Question

Jack owns a warehouse complex and legally assigns the rents to his daughter. Who is taxed...

Jack owns a warehouse complex and legally assigns the rents to his daughter. Who is taxed for federal income tax purposes on the rental income? What is the name of the doctrine applying to this fact-pattern?

Homework Answers

Answer #1

The assignment of income doctrine states that a taxpayer -

(a) who earns income from property that the taxpayer owns; or

(b) from services that the taxpayer performs ;

generally cannot avoid liability for tax on aforessaid incomes earned by assigning it to another person or entity, whoever such person or entity may be.

In the Lucas v. Ear case, Justice Holmes first enunciated the principle that income from personal services "must be taxed to him who earns it,, and that assignments of such income "however skilfully devised" will not be respected for tax purposes.

The Supreme Court of USA has described this principle-now known as the assignment of income doctrine-as the "first principle of income taxation.

Hence, the rental income shall continue to be txed in the hands of Jack. Doctorine is Assignment of Income Doctorine

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Compare the situation of two farmers, one who owns his land and the other who rents...
Compare the situation of two farmers, one who owns his land and the other who rents it from a landlord. In good times (which happen with probability 1/2), the owner-farmer earns an income of 125. In bad times (also with probability 1/2), he earns an income of 75. The tenant works on a farm that is twice as large and earns an income of 250 in good times and 150 in bad times (both with probability of 1/2). However, he...
Supreme Leader Snoke (an individual), owns a condominium near Windandsea Beach in San Diego. He rents...
Supreme Leader Snoke (an individual), owns a condominium near Windandsea Beach in San Diego. He rents the condo during the summer and uses it for vacations also. In 2017, Snoke rented the condo to vacationers for 90 days. He stayed in the condo 30 days for his own use. Snoke uses the IRS method to allocate expenses. His gross rental income was $16,000 and the total expenses associated with the condo are: Expense Category Total Expenses Strangely convenient empty column...
Barry is a lawyer who owns 10 apartment buildings managed by his brother's real estate business....
Barry is a lawyer who owns 10 apartment buildings managed by his brother's real estate business. At the end of the year, the apartment buildings resulted in a $40,000 loss. Barry earned $80,000 in wages, and his wife, Claire, earned $20,000 from a part-time job. Their other income included $5,000 from mutual funds. They had no other income. Barry and his wife file a joint income tax return. How much of the rental loss can Barry and Claire use assuming...
1.( T or F ) An individual who directly owns real estate and earns net rental...
1.( T or F ) An individual who directly owns real estate and earns net rental income for the tax year January 1 – December 31, 2018 will have an effective tax rate of 29.6% on it. 2.( T or F ) Jumbo LLC, is treated as a partnership and is owned by 50% by two individuals, Rod and Tom. Jumbo LLC acquired Bighorn Center, an industrial rental property for $2 million and collects rent from tenants. When Bighorn Center’s...
Jack, a geologist, had been debating for years whether or not to venture out on his...
Jack, a geologist, had been debating for years whether or not to venture out on his own and operate his own business. He had developed a lot of solid relationships with clients and he believed that many of them would follow him if he were to leave his current employer. As part of a New Year’s resolution, Jack decided he would finally do it. Jack put his business plan together and, on January 1 of this year, Jack opened his...
Question 25 State sales taxes tend to be regressive in that higher income-people save and invest...
Question 25 State sales taxes tend to be regressive in that higher income-people save and invest rather than consuming all their income like lower-income people, so they pay a lower portion of their income on sales taxes which are consumption based. To offset this regressivity, most state sales tax rules do what? Base sales tax rate on the level of income of the purchaser. Rebate excess sales taxes paid to low income taxpayers on application. Exempt certain necessities that all...
Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2019. She...
Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2019. She is 45 years old and has been divorced for four years. She receives $1,200 of alimony payments each month from her former husband (divorced in 2016). Reba also rents out a small apartment building. This year Reba received $50,000 of rental payments from tenants and she incurred $19,500 of expenses associated with the rental. Reba and her daughter Heather (20 years old at the...
Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2020. She...
Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2020. She is 45 years old and has been divorced for four years. She receives $1,200 of alimony payments each month from her former husband (divorced in 2016). Reba also rents out a small apartment building. This year Reba received $50,000 of rental payments from tenants and she incurred $19,500 of expenses associated with the rental. Reba and her daughter Heather (20 years old at the...
Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2018. She...
Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2018. She is 45 years old and has been divorced for four years. She receives $1,200 of alimony payments each month from her former husband (divorced in 2016). Reba also rents out a small apartment building. This year Reba received $50,000 of rental payments from tenants and she incurred $19,500 of expenses associated with the rental. Reba and her daughter Heather (20 years old at the...
Reba Dixon is a fifth-grade school teacher who earned a salary of $38,300 in 2018. She...
Reba Dixon is a fifth-grade school teacher who earned a salary of $38,300 in 2018. She is 45 years old and has been divorced for four years. She receives $1,255 of alimony payments each month from her former husband (divorced in 2016). Reba also rents out a small apartment building. This year Reba received $50,400 of rental payments from tenants and she incurred $19,656 of expenses associated with the rental. Reba and her daughter Heather (20 years old at the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT
Active Questions
  • Consider insertsort. Suppose that the input array A has 1% probability to be monotonically decreasing. Show...
    asked 10 minutes ago
  • Your company is thinking of introducing a Bring Your Own Device (BYOD) policy. You have been...
    asked 16 minutes ago
  • Attached is the file GeometricObject.java. Include this in your project, but do not change. Create a...
    asked 18 minutes ago
  • Suppose the number of cars in a household has a binomial distribution with parameters n =...
    asked 21 minutes ago
  • HR needs some information on the new interns put into a database. Given an id, email,...
    asked 42 minutes ago
  • Problem solving strategies Questions years = input("Enter a number of years and I'll tell you how...
    asked 47 minutes ago
  • Calculate ?Hrxn for the following reaction: CH4(g)+4Cl2(g)?CCl4(g)+4HCl(g) Use the following reactions and given ?H?s. C(s)+2H2(g)?CH4(g)?H=?74.6kJC(s)+2Cl2(g)?CCl4(g)?H=?95.7kJH2(g)+Cl2(g)?2HCl(g)?H=?184.6kJ Express...
    asked 53 minutes ago
  • ASCII (American Standard Code for Information Interchange) has an encoding for every character of the alphabet,...
    asked 1 hour ago
  • Is home confinement with electronic monitoring a deterrent? Are there negatives to being confined to one’s...
    asked 1 hour ago
  • Social hostility can have severe lasting effects of interperpersonal relationship during our adolescence years, which if...
    asked 1 hour ago
  • - A series RLC circuit has R=15 ?, L=1.5 H, and C=15 ?F. (a) For what...
    asked 1 hour ago
  • TV Circuit has 30 large-screen televisions in a warehouse in Erie and 60 large-screen televisions in...
    asked 1 hour ago