Question

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

Answer 1

A taxpayer paying his 10-year-old daughter $50,000 a year for consulting likely violates the constructive receipt doctrine.

This is further explained below.

What is constructive receipt doctrine.?

Generally, When a money taxpayer receives gross income for federal income tax purposes, the theory of constructive receipt is applied to make this determination.

If a taxpayer has complete discretion over deciding when certain types of income will or should be paid, that person is liable for tax in the current year.

In conclusion, If a taxpayer gives his daughter, who is only ten years old, fifty thousand dollars a year for consulting work, the taxpayer has most certainly violated the constructive receipt law.

Read more about the constructive receipt doctrine.

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