Schneer v. Commissioner

P referred clients to law firm A, by whom he was employed as an associate. He received a salary and a percentage of fees generated by the referred clients. P then left law firm A and became a partner of law firm B and agreed to turn over any income from his practice of law to B from that date forward. After he became a partner of B, P consulted concerning clients he had referred to A. With one exception, the fees were earned after P left A. When fees were received from A, P turned them over to B. B accounted for and reported the fees, for tax purposes, as partnership income which P reported…