Duffy Dungeness is a 60-year-old attorney who has built up a relatively small, but highly successful, law practice in Monterey, California. Duffy's daughter and only child, Eunice, just graduated in the top of her class from Big University Law School. Eunice was heavily recruited by New York larr liss at salaries that ranged from $100,000 to $150,000. Nevertheless, Eunice decided to join her father's law practice as an employee. Duffy agreed to pay her a yearly salary of $50,000 as well as a bonus equal to half of the practice's profits in excess of $50,000. During their first year of practice together Duffy and Eunice earned $550,000 of net income, after payment of Bunice's $50,000 salary. Duffy then distributed $50,000 to himself, and Duffy and Eunice divided the remaining $500,000 equally. Should that allocation of the firm's profits be respected for tax purposes?