Ralph and Tina are married, file jointly, and have $500,000 of taxable income. They transfer ownership of corporate bonds to Pam, their single daughter. There is $14,000 of interest on the corporate bonds in the current year. In each of the following cases, determine the amount of tax the family saves in the current year because Pam owns the bonds rather than Ralph and Tina. Assume Pam claims the standard deduction.
a. Pam is age 12 and a dependent of her parents. Her only gross income is the $14,000 of interest.
b. Pam is age 25 and not a dependent of her parents. Her gross income is comprised of the $14,000 of interest and $35,000 of wages.