Doug and Pattie received the following interest income in the current year:

Greenbacks Bank also gave Doug and Pattie a cellular phone (worth $100) for opening the savings account.What amount of interest income should they report on their joint income tax return?

Question

Doug and Pattie received the following interest income in the current year:
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Greenbacks Bank also gave Doug and Pattie a cellular phone (worth $100) for opening the savings account.What amount of interest income should they report on their joint income tax return?

Quizplus · Accepted Answer

Doug and Pattie received $4,900 of interest income. However, they can exclude the interest income earned on their Series EE U.S. savings bonds ($600) because they used the proceeds to pay for their son's college education. Therefore, they should report only $4,300 of interest income on their joint income tax return. The $100 value of the cellular phone they received is not considered interest income and does not need to be reported. So, the total interest income they should report is $4,575 ($4,300 + $275). Therefore, the correct option is (C).

Doug and Pattie Received the Following Interest Income in the Current