income_shifting_v_assignment - the entity variable planning...

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An Attempt at Income Shifting and the Assignment of Income Doctrine Mr. Lucas owns rental property generating $30,000 of annual income. He directs his tenants to pay their rent directly to his daughter, Meredith. Mr. Lucas’s marginal rate is 35 percent, and Meredith’s is 15 percent. If Mr. Lucas could successfully shift taxation of the rental income to his daughter,
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Unformatted text preview: the entity variable planning strategy would save the family unit $6,000 ($30,000 x (35% – 15%) of tax per year. However, the assignment of income doctrine will tax the rental income to Mr. Lucas, because he retains ownership of the underlying property. The cash flow to Meredith will be treated as a gift....
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This note was uploaded on 03/03/2010 for the course ACG 6845 taught by Professor Kelliher during the Spring '09 term at University of Central Florida.

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