American College Exam HS330 Topic 1 Question 87 Discussion

Actual exam question for American College's HS330 exam

Question #: 87
Topic #: 1

A single man with substantial assets and income is supporting his 80-year-old partially senile mother with monthly cash gifts. He is trying to find a practical way to support his mother while at the same time saving federal gift and income taxes without giving up ultimate control of any assets. Which of the following courses of action will best accomplish these objectives?

AMake her an interest free loan with a principal amount large enough to produce sufficient income for her support when invested in corporate bonds

BMake her annual gifts of enough interest income from the tax free municipal bonds in his portfolio so that she will be able to support herself

CMake her a gift of enough corporate bonds from his portfolio so that she will be able to support herself from the interest payments

DPurchase corporate bonds that pay interest in an amount sufficient for her to support herself and assign the interest payments to her

Show Suggested Answer

Suggested Answer: D

by Mozell at May 07, 2024, 03:31 AM

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Tandra

12 days ago

Wait, so he's trying to find a way to avoid paying taxes on the money he's giving to his own mother? That's pretty messed up, if you ask me.

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Zona

13 days ago

I think Option C is the way to go. Gifting the corporate bonds directly to his mother is the simplest and most straightforward solution.

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Melina

19 days ago

Haha, this guy's trying to find a loophole to save on taxes! I'd just tell him to suck it up and pay the taxes - it's the right thing to do.

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Shayne

1 months ago

I'm not sure about that. Option B might be better, as it allows him to keep the assets in his own portfolio while still providing the necessary income for his mother.

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Willis

18 days ago

I think option B is a good choice. It allows him to keep control of his assets while still supporting his mother.

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2 months ago

I think option D is the best choice.

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