c$.$ What are the current and future fax consequences of annual gifts to their son?

A$.$ Each gift potentially increases the child's income. If the child has unearned income, it is not subject to the kiddie tax rules and therefore not included on the parent's return.

B$.$ Each gift potentially increases the child's income. If a dependent child's unearned income increases above $$400,$ there is a potential tax and the tax on income over $$1,150$ will be filed by the child on Form $1040.$

C$.$ Each gift potentially increases the child's income. If a dependent child's unearned income increases above $$1,150,$ there is a potential tax and the tax on income over $$2,300$ will be at higher rates as long as the child is under age $18(24$ in some instances$).$

D$.$ Each gift potentially decreases the child's income. Therefore, it may be desirable to elect the annual reporting of Series EE interest.