Mr.and Mrs.Kusra are in the top tax bracket.They have just had a baby.The Kusras plan to gift a corporate bond they currently own to the baby.The bond pays $2,100 of interest income per year.The Kusra family overall will save taxes if the bond is transferred to the child.

Question

Quizplus · Accepted Answer

By transferring the bond to the baby, the interest income will now be taxed at the baby's lower tax rate instead of Mr. and Mrs. Kusra's higher tax bracket. This can result in significant tax savings for the family overall.

MrAnd MrsKusra Are in the Top Tax Bracket