Case Citation
Legal Case Name

Johnson v. Commissioner Case Brief

United States Tax Court1982Docket #16713241
1982 U.S. Tax Ct. LEXIS 91 78 T.C. No. 62 78 T.C. 882 Tax Corporations

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Case Brief Summary & Legal Analysis

General Brief
3 min read

tl;dr: A professional basketball player contracted his services to his personal corporation, but his NBA team refused to contract with the entity. The court held the player, not the corporation, was the true earner of the income because the team contracted directly with him.

Legal Significance: This case establishes a key two-part test for determining whether a personal service corporation or its employee is the true earner of income, emphasizing the necessity of a contract between the corporation and the service-recipient.

Johnson v. Commissioner Law School Study Guide

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Case Facts & Court Holding

Key Facts & Case Background

Petitioner Charles Johnson, a professional basketball player for the San Francisco Warriors, entered into an agreement with Presentaciones Musicales, S.A. (PMSA), a Panamanian corporation. This agreement granted PMSA the exclusive right to his services in professional sports in exchange for a fixed monthly payment. PMSA then licensed these rights to EST International Ltd. (EST). Johnson’s representative attempted to have the Warriors contract directly with PMSA for Johnson’s services, but the team adamantly refused. The Warriors insisted on, and Johnson signed, a standard NBA Uniform Player Contract directly with the team. Subsequently, Johnson executed an assignment of contract rights, directing the Warriors to pay his salary to EST. The Warriors complied, though they continued to issue Form W-2s in Johnson’s name and withheld taxes from the payments. On his tax returns, Johnson reported only the monthly payments he received from EST, not the full salary paid by the Warriors. The Commissioner determined that the entire salary paid by the Warriors constituted income to Johnson.

Court Holding & Legal Precedent

Issue: Is a professional athlete, who has an exclusive service contract with a personal corporation, taxable on the full salary paid by his team when the team contracts for his services directly with him and not with the corporation?

Yes. The full amounts paid by the Warriors for the petitioner’s services Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse

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Legal Issue

Is a professional athlete, who has an exclusive service contract with a personal corporation, taxable on the full salary paid by his team when the team contracts for his services directly with him and not with the corporation?

Conclusion

This case provides a critical framework for analyzing the tax consequences of Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure do

Legal Rule

Income must be taxed to the one who earns it. For a Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolo

Legal Analysis

The court applied the assignment of income doctrine articulated in *Lucas v. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit i

Flash-to-Full Case Opinions

Flash Summary

  • A professional athlete is taxed on his full salary, even if
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deser

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