Rachel and Riley Randall are married and file a joint return. They anticipate having taxable income of $250,000 in the next year and are considering whether or not to purchase a personal residence. The residence would provide Rachel and Riley with additional tax deductions for mortgage interest and real estate taxes of $21,600.

A. Considering the 2016 tax rates, what is their marginal tax rate for purposes of making this decision? Since the $250,000 is taxable income (not AGI), the itemized deductions (without considering the residence) and the personal exemptions have already been deducted.

b.Calculate the couple's federal tax savings applicable to the proposed additional deductions, using the 2016 tax rate schedule. Calculate the actual tax on their taxable income without the deductions relative to the residence and the tax on their taxable income considering the increased deductions.taxable income considering the increased deductions.

c.Calculate the federal tax rate applicable to the tax savings. (Hint: consider the tax savings associated with the additional deductions as compared to the amount of the deductions)