The Concept of Income Splitting
1.    If income is taxed to the person whose services or property created it, the taxpayer will pay tax at the rate that Congress ahs decided reflects the proper social burden for a particular level of income.
2.    Lucas v. Earl (1930)
a.    K b/w husband and wife ½ of what husband earns is instantly property of wife; this is b/f the joint return (this was so they could take income from the higher taxpayer and give it to the lower taxpayer), t/f the total tax is less, this is achieved by treating ourselves as community property.
b.    Justice Holmes that it was a good K and legitimate, however, for tax purposes the SC disregarded the K.
c.    a test from Lucas, it is not the person who receives the income but the person who controls the earning of the income
3.    general rule: from Lucas v. Earl, is that income is taxed to the one who earns it—it is easy to state but not always easy to apply;
a.    this is very hard to rectify;
i.    for example:  if a lawyer earns $100K for a firm, but is only paid $50K?  should he report that on GI?  No, the firm has the ultimate direction and control
4.    remember:  you cannot escape the tax system even with the most skillfully devised plan
5.    Ascher says:  you have no prospect to divert your income (you cannot even assign yourself to a trust [Vnuk v. Commissioner (1980)])—it was decided that Vnuk himself was the one who earned & controlled the income, t/f he should pay the taxes; you cannot separate the fruit from the tree!
6.    Vnuk v. Commissioner
a.    ask: “who has ultimate direction and control over the earning of the compensation” :
i.    it is important to consider who has the authority to dictate:
1.    the nature and extent of the individual’s services and
2.    to whom those services should be rendered