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 1,2013.Wally is in the 15% tax bracket.The 2013 net tax savings for the family unit of Ward,June and Wally related to the transfer of the bond is

Question

Quizplus · Accepted Answer

The correct answer is B because the net tax savings for the family unit is $130. The parents are in the 28% tax bracket, so they would have paid $280 in taxes on the $1,000 of interest income. The son is in the 15% tax bracket, so he will pay $150 in taxes on the interest income. The net tax savings for the family unit is $280 - $150 = $130.

Ward and June Are in the 28% Tax Bracket