Question

Explain the significance of Lucas v. Earl and Helvering v.

Horst.

A.

Lucas v.​ Earl, the Supreme Court held that income from property is taxed to the person who owns the property rather than the person who receives the income. Helvering v.​ Horst, the Supreme Court held that earnings from labor are taxed to the person who performs the services rather than the person who receives the income.

B.

Lucas v.​ Earl, the Supreme Court held that earnings from labor are taxed to the person who performs the services rather than the person who receives the income. In Helvering v.​ Horst, the Supreme Court held that income from property is taxed to the person who owns the property rather than the person who receives the income. One cannot assign income by arranging to have payment made to another person.

C.

Helvering v.​ Horst, the Supreme Court held that earnings from labor are taxed to the person who performs the services rather than the person who receives the income. Lucas v.​ Earl, the Supreme Court held that the assignment of income from property is taxed to the person who receives the income. One can assign income by arranging to have payment made to another person.

D.

Lucas v.​ Earl, the Supreme Court held that a business is taxed on the earnings from any services rendered. Helvering v.​Horst, the Supreme Court held that the assignment of income from property is taxed to the person who receives the income. One can assign income by arranging to have payment made to another person.

Answer 1

A husband (Luca V.Earl) was taxed on the earnings from his law practice, even though he had signed a legally enforceable agreement with his wife that earnings should be shated equally. An agreement to assign income doesn't permit a person to avoid tax on income.

Here what ever income earned by individual can not be pass to other and it has to be taxed in his own hands.

In case of Helvering V.Horst, the tax payer detached some of interest coupons and gave it to his son who in turns collected the income and shown in his return of income. The supreme Court held that the tax payer should taxed on the interest income as the bonds are owned by him. This leads to basic rule that in order to transfer of income from the property the taxpayer has to transfer the ownership of the property itself.