Introduction to Chapters 7 and 8

• Author: Deborah A. Geier
• Pages: 184-184

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Unit III:

The Possibilities for Income Shifting

Introduction to Chapters 7 and 8

This unit consists of two chapters that explore the possibilities for shifting income from one to

another or splitting income between two (or more) taxpayers. Because of the progressive rate

structure in § 1, the total tax paid can sometimes be lowered if income is shifted to another in a

lower marginal rate bracket or if income is split between two taxpayers, with the ensuing ability

to use the lower rate brackets twice.

Chapter 7 starts with an examination of both inter vivos gifts during life and death-time bequests

because the § 1015 basis rule for inter vivos gifts, in particular, carries with it the possibility to

shift built-in gain from one taxpayer to another.

Chapter 8 then considers other income-shifting possibilities within both the intact and fractured

families, including the assignment-of-income doctrine under the common law and related statutory

provisions, as well as divorce.