Introduction to Chapters 7 and 8

Author:Deborah A. Geier
Pages:184-184
 
FREE EXCERPT
-184-
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.

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