Question

Required information [The following information applies to the questions displayed below.) Cecil cashed in a Series EE savings bond with a redemption value of $21,000 and an original cost of $14,700. 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 $69,500. Amount of interest to be included in gross income

Answer 1

Calculation for interest amount to be included in his Gross Income :

		a Scenerio	b Scenerio
a	Total expenses paid on qualifiable higher education	21000	6300
b	Total proceeds of EE Bonds [principal/=Interest]	21000	21000
c	Interest	6300	6300
d	a/b	1.00	0.30
e	c*d	6300	1890
f	Modified Adjusted Gross Income	69500	65300
g	Allowable Modifies Adjusted Gross Income for single tax payers	76000	76000
h	f-g	-6500	-9700
i	Substract h from g , if 0 or less mention 0	0.00	0.00
j	Excludable saving bond interest	6300	1890
k	Includable Interest in Gross Income [10-3]	0	4410