Alfred Is a Consultant for Data Planners

question 28

Multiple Choice

Alfred is a consultant for Data Planners. In an effort to minimize his tax liability he enters into a legal contract transferring 25% of the fees from a new consulting contract to his son Ken, who is 42, and owns a pest control business. Which of the following statements concerning the transaction is correct?
I.The assignment-of-income doctrine prevents Alfred from transferring taxation of the income to his son.
II.The assignment-of- income doctrine does not apply because the transfer is supported by a legal contract.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct
• D)Neither statement is correct.