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Pepa Madrigal has operated a very successful bakery for 30 years, and has accumulated investment that earn annual interest income of $40,000. Her other income put her in the top income tax

Pepa Madrigal has operated a very successful bakery for 30 years, and has accumulated investment that earn annual interest income of $40,000. Her other income put her in the top income tax

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Pepa Madrigal has operated a very successful bakery for 30 years, and has accumulated investment that earn annual interest income of $40,000. Her other income put her in the top income tax bracket for personal tax purposes. She has a son, Antonio who is 22 years old and currently has no income. Antonio's only personal tax credit is the personal tax credit. Determine the amount of federal income taxes that could be saved by transferring the interest earning investments to a trust with Antonio as the income beneficiary, assuming that the trust will be required to distribute all of its income each year.
Transcribed Image Text:Pepa Madrigal has operated a very successful bakery for 30 years, and has accumulated investment that earn annual interest income of $40,000. Her other income put her in the top income tax bracket for personal tax purposes. She has a son, Antonio who is 22 years old and currently has no income. Antonio's only personal tax credit is the personal tax credit. Determine the amount of federal income taxes that could be saved by transferring the interest earning investments to a trust with Antonio as the income beneficiary, assuming that the trust will be required to distribute all of its income each year.
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