ACCT410 Income Tax Corporate

Overview

Suppose you are a tax planner and one of your clients, Colleen, comes in for your help with some tax planning. Colleen owns her own landscaping business and has become quite successful in recent years. She is discouraged about the high tax rate she is now paying and would like to make some changes so she can lower her taxes. Colleen says she read about the assignment of income doctrine on the Internet and how some taxpayers shift income to related parties to lower their taxes. Colleen wants to use this strategy to shift some of her income to her daughter, Rosalee, who is in college. Since Rosalee only works part-time, she pays a much lower tax rate. Colleen believes she can assign Rosalee income that will be taxed at the lower rate and wants to know what amount she should assign to Rosalee for the best financial benefit.

In 2 to 3 pages, not including a title page or citation page, provide your analysis and rationale of the following:

Explain whether assigning income to Rosalee is a good income-shifting strategy for Colleen is to use.
• Explain how the assignment of income doctrine limits income-shifting between related parties.
• Provide an example that illustrates a strategy for Colleen could use to legally shift income for potential tax saving