Federal Tax Research 10th Edition by Roby Sawyers,William Raabe,Gerald Whittenburg,Steven Gill

Exercise 46

Dieter won the lottery this year, which means that he will receive $400,000 per year for the next 30 years. The present value of Dieter's prize is about $3.75 million. Conscious of the tax benefits of income shifting, Dieter irrevocably assigned one-fifth of every annuity payment to his daughter Heidi. What are the effects of these events on Dieter's taxable income