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Mrs. Franklin, who is in the 39.60 percent tax bracket, owns a residential apartment building...

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Accounting

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Mrs. Franklin, who is in the 39.60 percent tax bracket, owns a residential apartment building that generates $118,000 annual taxable income. She plans to create a family partnership by giving each of her two children a 20 percent equity interest in the building. (She will retain a 60 percent interest.) Mrs. Franklin will manage the building, and value of her services is $38,000 per year. If Mrs. Franklin's children are in the 15 percent tax bracket, compute the tax savings from this income-shifting arrangement. ignore any payroll tax consequences.) Tax savings from this income-shifting arrangement Mr. and Mrs. Lund and their two children (Ben and June) are the four equal partners in LBJ Partnership. This year, LBJ generated $64,000 ordinary income. Compute the tax cost for the business if Mr, and Ms. Lund's marginal rate is 33 percent, Ben's marginal rate is 28 percent, and June's marginal rate is 15 percent. (Ignore SE tax consequences.) Tax Cost Mr. and Mrs. Lund's share Ben's share June's share Tax cost of the business income

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