Isabel is a self-employed electrician. All cash payments she receives from customers are deposited into a bank account held in the name of her son. Isabel does not have use of the funds. Therefore, she does not think she needs to include the cash receipts in her gross income. What concept or doctrine applies to this situation?

Question

Quizplus · Accepted Answer

The doctrine of Assignment of Income applies to this situation. According to this doctrine, income is taxed to the person who earns it, and cannot be assigned to others to avoid tax liability. In this case, Isabel is the one who earned the income, even though the payments are made to her son's bank account. Therefore, she should include the cash receipts in her gross income for tax purposes.

Isabel Is a Self-Employed Electrician