The amount of interest income a taxpayer recognizes when he redeems a U.S. savings bond is:

Question

Quizplus · Accepted Answer

The amount of interest income a taxpayer recognizes when he redeems a U.S. savings bond is the excess of the bond proceeds over the taxpayer's basis in the bonds. The basis in the bond is the purchase price paid for the bond, and the bond proceeds include both the purchase price paid for the bond plus any interest earned over the life of the bond. Therefore, the portion of the bond proceeds that exceeds the basis in the bond represents the interest income that is taxable to the taxpayer in the year of redemption.

The Amount of Interest Income a Taxpayer Recognizes When He