Farouk transfers bonds with a face value of $10,000 into his dependent son's name on January 1, 2017 as his son will turn 24 this year. The bonds pay 8 percent interest annually and Farouk bought the bonds in 2008 for $9,500 (the discount was not required to be amortized). His son sells the bonds for $10,500 at the end of 2017 after receiving the 2017 interest. If Farouk is in the 39.6 percent marginal tax bracket, how much did he save in 2017 in taxes by transferring the bonds into his son's name. His son had no other income in 2017.

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The Answer of Farouk transfers bonds with a face value of $10,000 into his dependent son's name on January 1, 2017 as his son will turn 24 this year. The bonds pay 8 percent interest annually and Farouk bought the bonds in 2008 for $9,500 (the discount was not required to be amortized). His son sells the bonds for $10,500 at the end of 2017 after receiving the 2017 interest. If Farouk is in the 39.6 percent marginal tax bracket, how much did he save in 2017 in taxes by transferring the bonds into his son's name. His son had no other income in 2017.

Farouk Transfers Bonds with a Face Value of $10,000 into His