Problem: Mr. and Mrs. WG's AGI averages $425,000, and they are in the 35 percent tax bracket. They support their 22-year-old son who is a full-time college student. Mr. and Mrs. WG are considering giving him a bond portfolio that generates $20,000 annual interest income. He could support himself with this income stream (he would be financially independent) and would file his own tax return. Compute the annual tax savings to the family resulting from this plan.
Required: Prepare a letter to Mr. and Mrs. WG in which you compute and explain the annual tax savings that would result from the described plan.