Dr. Phil is a physician and owns his own medical practice. For the past several years, his marginal income tax rate has been 40 percent. Dr. Phil's daughter, a college student, has no taxable income. During the last four months of the year, Dr. Phil instructs his patients to remit their payments directly to his daughter.

Is Dr. Phil violating the tax code and what is the IRS treatment of his daughter's income if any?