Which of the following is more likely to receive IRS scrutiny under the assignment of income doctrine?
A) A corporation paying its shareholders a $20,000 dividend.
B) A parent employing her child in the family business.
C) A taxpayer gifting stock to his children.
D) A cash-basis business delaying billing its customers until after year end.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

The assignment of income doctrine is a tax law principle that assigns income to the person who earns or produces it. This principle is often applied to situations where income is intentionally diverted from the person who earned it to another individual or entity with a lower tax rate or no tax liability. In this context, a parent employing her child in the family business may receive IRS scrutiny under the assignment of income doctrine if it appears that the parent is diverting income to the child to avoid taxes. The other choices do not necessarily involve intentional income diversion and are less likely to receive IRS scrutiny under the assignment of income doctrine.

Which of the Following Is More Likely to Receive IRS