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Schneer v. Commissioner

United States Tax Court
97 T.C. 643 (1991)


Facts

Schneer (plaintiff), an attorney, was an associate at Ballon, Stoll & Itzler (BSI). When Schneer left BSI, BSI committed to paying Schneer a percentage of fees for those clients that Schneer referred while he was an associate. In 1983, Schneer joined Bandler & Kass (B & K) as a partner. In 1985, Schneer joined Sylvor, Schneer, Gold & Morelli (SSG & M) as a partner. As part of his partnership agreement with B & K and SSG & M, Schneer agreed to contribute to the partnership all legal fees he earned, even if he did not earn them as part of that partnership. Pursuant to these agreements, Schneer turned over the fees he received from BSI in 1984 and 1985 to B & K and SSG & M, respectively. B & K and SSG & M treated these fees as partnership income, and their respective partners (including Schneer) reported their portions of this partnership income in their tax returns. The Internal Revenue Service (IRS) (defendant) ruled that the fees from BSI should be treated as Schneer’s individual income pursuant to the assignment-of-income doctrine. Schneer appealed to the United States Tax Court.

Rule of Law

Issue

Holding and Reasoning (Gerber, J.)

Dissent (Halpern, J.)

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