Mr. Gates is the president of an established and successfulcompany. The company pays Mr. Gates $1,000,000 in salary each year.Mr. Gates, a renowned philanthropist, has directed the board ofdirectors to pay him nothing for the year and instead use the$1,000,000 to which he is otherwise entitled to create ascholarship fund. The fund, which he would help oversee, would beused to create scholarships for worthy high school studentsotherwise unable to afford college.
What are the tax ramifications to Mr. Gates andto the company? Please cite all resources in your research. Onekeyword term to start your search is “assignment of income.”
