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Married filing separately looks like it can occasionally save taxes by keeping one spouse in a lower tax bracket. How much flexibility does a taxpayer have in assigning assets to himself or his spouse?

For example, since dividends are taxed at the bracket amount, it would make sense to assign all dividends to the lower paid spouse (lower tax bracket). On the other hand, long term capital gains get taxed at the more favorable 20%, so the spouse making more would not pay a penalty by owning these.

Now here's the tough question. With jointly owned mutual funds that pay both dividends and long term capital gains; how supportable is a couple's statement that the dividends are owned by the lower paid spouse, and the LTCG distributions are owned by the higher paid spouse?
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