Document Type

Article

Abstract

This article will analyze the proper application of the assignment of income doctrine to personal service income. Part II will trace the historical development of the assignment of income doctrine and will analyze the doctrine's underlying rationale. The importance of distinguishing between gratuitous and nongratuitous assignments of income will be developed in this Part. Part III will present a number of hypothetical situations drawn from actual cases and rulings that involve the application of the doctrine to personal service income. This will both show the pervasiveness of the doctrine and lay the basis for further analysis. Part IV will demonstrate that the tests currently used by the Internal Revenue Service and the courts in these situations—the “similarity” test and the “agency” test—fail to provide either a rational or workable basis for solving these problems. Instead, they have resulted in a welter of unintelligible and irreconcilable decisions. Finally, Part V will show how reference to the doctrine's underlying purpose, and particularly to the basic distinction between gratuitous and nongratuitous assignments of income, solves many of the puzzles besetting the application of the doctrine.