Ronald is a consultant for Economic Forecasters, Inc. In an effort to minimize his tax liability he enters into a legal contract transferring 25% of the fees from a new consulting contract to his son Ken, who is 42, and owns a pest control business. Which of the following statements concerning the transaction is correct?
I.The assignment-of-income doctrine does not apply if Ken and Ronald are in the same marginal tax bracket.
II.The assignment-of- income doctrine does not apply if Ronald's son is under age 14.

Question

Ronald is a consultant for Economic Forecasters, Inc. In an effort to minimize his tax liability he enters into a legal contract transferring 25% of the fees from a new consulting contract to his son Ken, who is 42, and owns a pest control business. Which of the following statements concerning the transaction is correct?
I.The assignment-of-income doctrine does not apply if Ken and Ronald are in the same marginal tax bracket.
II.The assignment-of- income doctrine does not apply if Ronald's son is under age 14.
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Quizplus · Accepted Answer

The assignment-of-income doctrine applies regardless of the recipient's tax bracket or age, meaning income cannot be assigned to another person to avoid taxes.

Ronald Is a Consultant for Economic Forecasters, Inc