Leroy and Amanda are married and have three dependent children. During the current year, they have the
Question:
Leroy and Amanda are married and have three dependent children. During the current year, they have the following income and expenses:
Salaries .......... $110,000
Interest income ........ 45,000
Royalty income ....... 27,000
Deductions for AGI ..... 3,000
Deductions from AGI .... 9,000
a. What is Leroy and Amanda’s current year taxable income and income tax liability?
b. Leroy and Amanda would like to lower their income tax. How much income tax will they save if they validly transfer $5,000 of the interest income to each of their children? Assume that the children have no other income and that they are entitled to a $950 standard deduction but are not allowed a personal exemption deduction.
Step by Step Answer:
Concepts In Federal Taxation
ISBN: 9780324379556
19th Edition
Authors: Kevin E. Murphy, Mark Higgins, Tonya K. Flesher