Question

Cecil cashed in a Series EE savings bond with a redemption value of $22,500 and an original cost of $15,750.

For each of the following independent scenarios, calculate the amount of interest Cecil will include in his gross income assuming he files as a single taxpayer: (Leave no answer blank. Enter zero if applicable.)

a. Cecil plans to spend all of the proceeds to pay his son’s tuition at State University. Cecil’s son is a full-time student, and Cecil claims his son as a dependent. Cecil estimates his modified adjusted gross income at $68,700.

Answer 1

Solution:

a)

calculate the amount of interest Cecil will include in his gross income assuming he files as a single taxpayer

Description	Amount
Total expenses paid	$22,500
Interest included EE service (22,500 -15,750)	$6,750
Modified adjusted gross income	$68,700
Allowed modified adjusted gross income for single taxpayer ($68,700+$6,750)	$75,450
Excludable saving bond interest	$6,750
Includable interest in gross income ($6,750 -$6,750)	$0.00

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