Samuel Owns Some Land, Which Has an Oil Deposit Underneath

question 22

Multiple Choice

Samuel owns some land, which has an oil deposit underneath it. His annual royalties vary from $50,000 to $60,000. Because Samuel is in the highest marginal tax rate bracket, he would like to have some (or all) of the royalty income taxed to his son, Jack, thus lowering the overall tax on the royalty income. To do this
I.Samuel can gift part of the land to Jack.
II.Samuel can gift part of each year's royalties to Jack.
​

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Anxiety

A mental health disorder characterized by persistent and excessive worry, fear, or nervousness that interferes with daily activities.

Compensation

Payment or reward given for services provided, or a mechanism to counterbalance or make up for a deficiency or problem.

Devaluation

The reduction in importance, value, or respect for someone or something.

Identification

The process of recognizing or establishing the identity of a person or thing, or with someone sympathetically understanding their perspective.