Elmer received the following distributions from Virginiana Mutual Fund for the calendar year 2019: $$\begin{array} { l r }
\text { Ordinary dividends } & \$ 250 \
\text { Capital gain distributions } & \$ 170 \
\text { Nontaxable distributions } & \$ 80
\end{array}$$ Elsie, Elmer's wife, did not own any of the Virginiana Mutual Fund shares, but she did receive $1,475 in interest on a savings account at the Moss National Bank and $175 in interest on California Municipal Bonds. Elmer and Elsie filed a joint income tax return for 2019. What amount is reportable as taxable interest income?

Question

Elmer received the following distributions from Virginiana Mutual Fund for the calendar year 2019: $$\begin{array} { l r } 
\text { Ordinary dividends } & \$ 250 \
\text { Capital gain distributions } & \$ 170 \
\text { Nontaxable distributions } & \$ 80
\end{array}$$ Elsie, Elmer's wife, did not own any of the Virginiana Mutual Fund shares, but she did receive $1,475 in interest on a savings account at the Moss National Bank and $175 in interest on California Municipal Bonds. Elmer and Elsie filed a joint income tax return for 2019. What amount is reportable as taxable interest income?

Quizplus · Accepted Answer

Interest from savings accounts is taxable, so Elsie's $1,475 from Moss National Bank is taxable. However, interest from California Municipal Bonds is generally exempt from federal taxes, making the $175 not taxable. Therefore, the taxable interest income is $1,475.

Elmer Received the Following Distributions from Virginiana Mutual Fund for the Calendar