George, an unmarried cash basis taxpayer, received the following amounts this year: $$\begin{array} { l r }
\text { Interest on savings accounts } & \$ 2,000 \
\text { Interest on a state tax refund } & 600 \
\text { Interest on City of Salem school bonds } & 350 \
\text { Interest portion of proceeds of a 5\% bank certificate of deposit } & \
\quad \text { purchased last year on July 1 and matured on June 30 of this year } & 250 \
\text { Dividends on USG common stock } & 300
\end{array}$$ What amount should George report as gross income from dividends and interest this year?

Question

George, an unmarried cash basis taxpayer, received the following amounts this year: $$\begin{array} { l r } 
\text { Interest on savings accounts } & \$ 2,000 \
\text { Interest on a state tax refund } & 600 \
\text { Interest on City of Salem school bonds } & 350 \
\text { Interest portion of proceeds of a 5\% bank certificate of deposit } & \
\quad \text { purchased last year on July 1 and matured on June 30 of this year } & 250 \
\text { Dividends on USG common stock } & 300
\end{array}$$ What amount should George report as gross income from dividends and interest this year?

Quizplus · Accepted Answer

George should report $3,150 as gross income from dividends and interest this year. This includes $2,000 from savings accounts, $600 from a state tax refund, $250 from a bank certificate of deposit, and $300 from USG common stock dividends. The interest on City of Salem school bonds is generally exempt from federal income tax, so it is not included in the gross income calculation.

George, an Unmarried Cash Basis Taxpayer, Received the Following Amounts