Assume Alans parents make gifts of $10,000 to him every year starting at age one, and that

Alans parents are in the 35 percent income tax bracket, and that Alan is now 15 years old

and has $11,700 of interest income for 2013.

a.

Calculate the tax on Alans interest income.

b.

Explain why the kiddie tax rules are in the law.

25. In 2013, Erin purchased a solar system to generate electricity for her home, at a cost of

$5,000.

a.

How much is her tax credit in 2013?

b.

If she had purchased a solar heating system for her swimming pool at a cost of $3,500,

how much could she claim as a tax credit?

c.

If she had purchased a $5,000 solar electric system and a $4,500 solar heating system

for her principal home (not for the swimming pool), how much could she claim as a

tax credit?

d.

If she had purchased the electric system for her principal residence and the solar

heating system for a second residence, how much could she claim as a tax credit?