Mrs. Franklin, who is in the 37 percent tax bracket, owns a residential apartment building that...

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Mrs. Franklin, who is in the 37 percent tax bracket, owns a residential apartment building that generates $100,000 annual tax Tax savings from this income-shifting arrangement

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Answer 1

Answer #1

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As Franklin transferred 15% equity interest in building to two children
	Reduction in her income	=	*10000015%2*
		=	30000
a	Tax savings	=	*37%30000**
		=	11100

b	Tax liability for two Children's	=	*3000012%**
		=	3600

c	Net savings (a -b)	=	$7500

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Answer 2

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