The Service Corporation-- Who Is Taxable on Its Income: Reconciling Assignment of Income Principles, Section 482, and Section 351

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Vol: 37, Issue: 3, Page: 657

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Manning, Elliott
Corporations -- Taxation; Income tax -- Attribution rules; Business Organizations Law
article description
In evaluating potential abuses in the creation and operation of service corporations, the courts have been unable to define the proper roles of assignment of income principles and section 482, both of which may under certain conditions require the taxation of such corporations' employee-shareholders, and section 351, which shields certain transfers of income to the corporation. The author, after an analysis of case law and rulings that deal with service and other closely held corporations, proposes a framework in which to harmonize the policies of sections 482 and 351 in light of the assignment of income doctrine.