Question

I am using the 2019 Federal Taxation

5. 1:3-44 Interest Income. Holly inherited $10,000 of City of Atlanta bonds in February. In March, she received interest of $500, and in April she sold the bonds at a $200 gain. Holly redeemed Series EE U.S. savings bonds that she had purchased several years ago. The accumulated interest totaled $800. Holly received $300 of interest on bonds issued by the City of Quebec, Canada. What amount, if any, of gross income must Holly report?

Answer 1

Investment amount in City of Atlanta bonds, $10,000 on February

Received interest $500 in March (for only one month)

Sold price of city Atlanta bond $10,200

Then gain is$200

Redeemed interest series EE bonds U S savings bonds is $800.

Interest on bond issue by city of Quebec Canada is $300.

Total interest earned during a year is = 500+800+300=$1600

Gain on sale of bond = $200

Sale of investment amount $10,000 ( excluded of gained)

Gross income is = Total interest earned+ sale price of bonds

=$1600+$200+$10,000= $11800.

Gross amount of Holly Must report is $11,800.

she has to report on IRS in Form 1099-INT

Thank you.