Question
Can you solve this problem? Bart and Kesha are in the 39.6% tax bracket. They are interested in reducing the taxes they pay each year.
Can you solve this problem?
Bart and Kesha are in the 39.6% tax bracket. They are interested in reducing the taxes they pay each year. They are currently considering several alternatives. For each of the following alternatives, 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.
b. Sell the bonds from Part a rather than give them to their daughter, and buy tax-exempt bonds that pay 6%. Assume the bonds can be sold for an amount equal to their basis of $5,000.
c. Give $1,000 cash to a charity. Assume they itemize deduction and ignore any pahse out of itemized deductions.
d. Pay their daughter a salary of $10,000 for services rendered in their unincorporated business.
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