Question

Bendetta, a high-tax-rate taxpayer, owns several rental properties and would like to shift some income to her daughter, Jenine. Bendetta instructs her tenants to send their rent checks to Jenine so Jenine can report the rental income. Will this shift the income from Bendetta to Jenine? Why or why not?

1) Yes, this will shift the income from Bendetta to Jenine because Jenine will be reporting the rental income.
2) No, this will not shift the income from Bendetta to Jenine because the ownership of the rental properties remains with Bendetta.
3) Cannot be determined without more information.
4) None of the above.

Answer 1

No, this will not shift the income from Bendetta to Jenine because the ownership of the rental properties remains with Bendetta.

Step-by-step explanation:

No, this will not shift the income from Bendetta to Jenine because the ownership of the rental properties remains with Bendetta. Simply instructing tenants to send rent checks to Jenine does not change the legal ownership of the properties or the tax liability for rental income. In order to legally shift the rental income to Jenine, Bendetta would need to transfer ownership of the properties to her daughter.