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:

Preference Test

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An ancient Greek philosopher who founded Epicureanism, which teaches that happiness comes from pursuing pleasure and avoiding pain, focusing on simple pleasures and friendship.