Cherry’s widowed mother, Nancy, had to quit working for health reasons and now her only income is $1,100 per month from Social Security. Cherry recently became partner of a law firm and has moved into the 35% marginal tax bracket.

Cherry’s mother steadfastly insists on living independently so Cherry gave her mother $100,000 in 9% corporate bonds to supplement her income.

a. How much of her unified credit must Cherry use to avoid paying a gift tax?

b. How much income taxes are saved by the transfer of the bonds by Cherry to her mother?

AppendixLO1