Wilma has a $25,000 certificate of deposit (CD)at the local bank.The interest on this certificate, $1,000, was credited to her account this year but she must pay an early withdrawal penalty if she cashes in the CD before next year.Which of the following is a true statement?
A)Wilma must include the $1,000 of interest in her income this year.
B)Wilma must include the $1,000 of interest in her income when she cashes the CD.
C)Wilma must include the $1,000 of interest in her income this year only if the bank waives the early withdrawal penalty.
D)Wilma must include the $1,000 of interest in her income next year if she does not pay the early withdrawal penalty.
E)All of these choices are correct.

Question

Quizplus · Accepted Answer

Wilma must include the $1,000 of interest in her income this year regardless of whether or not she cashes in the CD. The interest has already been credited to her account and is considered taxable income.

Wilma Has a $25,000 Certificate of Deposit (CD)at the Local