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Many small business owners start with a sole proprietorship to the costs of forming a corporation or LLC. This is often a wise decision as statistics show that many small businesses generate losses for the first several years. The employer probably pays the waitress a little wage, can be allowed under many minimum wage laws because he has a job that typically generates practices. The IRS might therefore argue that my tip is paid "for" the employer. But I am under no compulsion to leave the waitress anything.

The employer, alternatively hand, is obliged to fund the services his workers render. So i don't think the exception under Section 102 can be. If the tip is taxable income to the waitress, memek purely under total principle of Section sixty one.

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