Bart and Kesha, who are in the $37\%$ tax bracket, are interested in reducing their taxes. They are currently considering several alternatives.

View the alternatives.

Requirement

For each alternative, indicate how much tax, if any, they would save.

a$.$ Make a gift of bonds valued at $$5,000$ that yield $$400$ per year interest to their $24-$year$-$old daughter, who has no other income. $($Round to the nearest whole dollar.$)$

Per year, they would save

Would the daughter be subject to tax on the interest?

Per year, they would save

The amount of interest per year they would forego is

Would they be better off to sell the Part a bonds and purchase tax$-$exempt bonds?

c$.$ Give $$1,000$ cash to a charity. Assume they itemize deductions and ignore any phaseout of itemized deductions. $($Round to the nearest whole dollar.$)$

Assuming no phase$-$out of itemized deductions, they would save

d$.$ Pay their daughter a salary of $$10,000$ for services rendered in their unincorporated business. $($Round to the nearest whole dollar. Assume that the salary is reasonable.$)$

Assuming the salary is reasonable, how much is deductible as a business expense?

Would the salary be taxable to the daughter as income?

How much will the parents save in income taxes?