Allocation of Income -- To Whom Is It Income?

Question 1

Rather than accept Eagles tickets given to her at work, A asks the firm to transfer the tickets to her father. Does A have income? Does the father? Explain.

Answer 1

A, yes.

Father, no. A gift.

Income must be taxed to he or she who earns it (anti-assignment of income rule)

Question 2

A is entitled to ten yearly payments in exchange for a covenant not to compete. He asks that next year’s payment be made to his landlord in payment for rent. What tax consequences to A?

Answer 2

Must pay taxes on the income.

Income must be taxed to he or she who earns it (anti-assignment of income rule)

Question 3

A rents an apt to B. A asks be to send the rent checks to his daughter, A2. Does A have income from the rental payments? Explain

Answer 3

Yes.

Income from property (investment income) is taxed to he or she who owns it.