A taxpayer paying his 10-year-old daughter $50,000 a year for consulting likely violates which doctrine?

Question

Quizplus · Accepted Answer

The substance-over-form doctrine is likely violated here because the IRS could argue that the payment to the 10-year-old daughter for consulting does not reflect the economic reality of the transaction and is instead a means to shift income and reduce the taxpayer's tax liability. This doctrine allows the IRS to reclassify transactions based on their substance rather than their form.

A Taxpayer Paying His 10-Year-Old Daughter $50,000 a Year for Consulting