Ward and June are in the 28% tax bracket.Included in their assets is a Dell Computer Corporation bond with a face value of $10,000.The bond pays $1,000 a year in interest.Ward and June gift the bond to their son,Wally (age 19),on January 1,2017.Wally is in the 15% tax bracket.The 2017 net tax savings for the family unit of Ward,June and Wally related to the transfer of the bond is

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The correct answer is B. The net tax savings for the family unit is $130. This is because Ward and June are in the 28% tax bracket, so they would have to pay $280 in taxes on the $1,000 of interest income from the bond. However, Wally is in the 15% tax bracket, so he will only have to pay $150 in taxes on the interest income. This results in a net tax savings of $130 for the family unit.

Ward and June Are in the 28% Tax Bracket