Borge v. Commissioner
United States Court of Appeals for the Second Circuit
405 F.2d 673 (2d. Cir 1968)
Income must be taxable to whoever earns it and it cannot be assigned to another who did not earn it.
Relevant Facts
Borge (the plaintiff) produced and sold poultry for years and sustained considerable losses each year. The plaintiff also formed another entity, Danica Enterprises, Inc., and transferred the poultry business to the corporation. At the time, the plaintiff earned substantial income as an entertainer. He assigned to Danica the rights to his services as an entertainer for five years in exchange for a $50,000 yearly salary. Danica received entertainment profits far greater than the $50,000 it paid to the plaintiff. Because of this, the plaintiff was able to offset its losses from the poultry business against the entertainment profits it received. Additionally, Danica did not arrange any entertainment contracts nor did it provide any other assistance to the plaintiff in his entertainment business. During a five-year period, the plaintiff generated an average of $166,465 in income for Danica. Under 26 U.S.C. §482, the Commissioner (the defendant) designated $100,000 of Danica’s income as personal income to the plaintiff.
Issue
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Holding & Reasoning
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Concurrence
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Dissent
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Last updated:
December 12, 2020
Judicial Opinion
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Procedural History
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Citations
405 F.2d 673 (2d. Cir 1968)