5.5.1 Basic Quiz -- Assignment of Income

The Supreme Court has ruled that income is taxed to those who earn the income no matter who enjoys the benefit of it when paid.

True False

Gain is always recognized when property is transferred.

True False

The assignment of income issue typically arises when a donor makes a cash gift to charity.

True False

Gifting appreciated property to charity bypasses the donor's capital gains tax liability that would be due on the sale of such property.

True False

An expectation that stock will be redeemed for cash is not sufficient to transform a gift of shares into a gift of cash from shares redeemed and then given as cash.

True False

Prearranged sales are subject to a bright-line test established by the Tax Court.

True False

If a C corporation buyer can compel performance on the sale following a vote by a majority of the shareholders in favor of the sale, the gain has ripened and the gift of shares will not bypass any accrued capital gain.

True False

Under Rauenhorst, even if there is no binding agreement, the gain will be treated as if it has ripened.

True False

The "ripened to a practical certainty" test is used to determine when to recognize gain.

True False

If a buyer can compel performance by a seller, there is a binding agreement.