Ward and June are in the 32% tax bracket. A bond of Dell Corporation with a face value of $10,000 is included in their assets. The bond pays $1,000 interest annually. Ward and June gift the bond to their son, Wally (age 19), on January 1, 2019. Wally is in the 10% tax bracket. Wally's taxable income from the receipt of the bond and the bond interest in 2019 is:
A. $-0-.
B. $1,000.
C. $1,500.
D. $10,000.
E. $11,000.
Answer: B
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