Leroy and Amanda are married and have three dependent children. During the current year, they have..

Leroy and Amanda are married and have three dependent
children. During the current year, they have the following income and expenses:

Salaries                                 $110,000

Interest income                45,000

Royalty income                       
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Leroy and Amanda are married and have three dependent
children. During the current year, they have the following income and expenses:

Salaries                                 $110,000

Interest income                45,000

Royalty income                                 27,000

Deductions for AGI         3,000

Deductions from AGI     9,000

a. What is Leroy and Amanda’s current year taxable income
and income tax liability?

b. Leroy and Amanda would like to lower their income tax.
How much income tax will they save if they validly transfer $5,000 of the
interest income to each of their children? Assume that the children have no
other income and that they are entitled to a $950 standard deduction but are
not allowed a personal exemption deduction.

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