March 1999 Volune 12 No3 - Utah State Bar

16
like this, that is: the assignment of income to be received which
wi be taxable by the person who receives it, that the agreement
go on to provide that it wil be a payment to the spouse under
§ 71 of the Internal Revenue Code and wil thus be taxable to the
assignee who wi agree to include it in hislher income and pay
al taxes due on it.
We frequently deal with accounts receivable earned by a profes-
sional (doctor, lawyer, dentist, etc.). Under the decision of the
Utah Supreme Court in Sorenson v. Sorenson, 839 P.2d 774
(Utah 1992), accounts receivable can be considered to be an
asset of the professional which can be divided. Under the
Kochansky rationale, they should be valued as deferred income
and, therefore, taxes wil have to be paid when they are
received. If they are divided, they should be divided in such a
way as to recognize the impact of the Kochansky ruling. Thus, if
you are not able to convince the court to follow the rationale of
the prior Utah Supreme Court ofDogu v. Dogu, 652 P.2d 1308
(Uta 1989) and not include them as a divisible asset, the ta
effect must be argued. In fact, this is an issue that has been
argued among many famy lawyers as to whether or not these
accounts receivable should be considered as deferred income
that wil be used to pay almony and chid support or is an asset
to be divided in the estate. The Kochansky rationale would
seem to support the argument that this is deferred income
which should not be considered an asset or, if it is considered
an asset, it must be reduced by taxes that wi have to be paid
when this is collected, as the only way value can be recognized
is through collection and payout. Morgan v. Morgan, 795 P.2d
684 (Utah App. 1990).
~MBOCI
If assets which produce income are transferred, as opposed to
the income, the recipient, not the transferor, pays the taxes.
Meisnerv. U.S,) 133 F.3rd 654 (8th Cir. 1997). licenses and
copyrights were exchanged for a contract giving him a right to
income from certain songs. (The Eagles). Randal assigned an
undivided 40% of the royalty contract with al payments due
directly to Jennier. The court (based on a jury verdict) found
Randal had no control over Jennier's royalty rights and the
income was taxable to her. She was held to have received an
income producing asset not assigned income.
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Julie K. Morriss
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Randall B. Bateman
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David W. O'Bryant
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Frank W. Compagni
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