In the current taxable year, married couple H and W give a completed gift of a $20,000 certificate-of-deposit bearing simple interest to their 15-year-old child, C.The interest on the certificate paid to C during the current year totals $1,600.Under the assignment-of-income doctrine, the $1,600 must be included in the gross income of H and W.

Question

Quizplus · Accepted Answer

The assignment-of-income doctrine only applies to situations where the transferor retains some control over the income or its disposition. In this case, H and W made a completed gift of the CD to their child, so they no longer have any control over the interest income earned. Therefore, the interest income should be included in their child's gross income, not H and W's.

In the Current Taxable Year, Married Couple H and W