Question

How can congressional committee reports be used by a tax researcher?

1) Jerry purchased a U.S. Series EE savings bond for $744. The bond has a maturity value in 10 years of (1pts) $1,000 and yields 3% interest. This is the first Series EE bond that Jerry has ever owned. a. Jerry can defer the interest income until the bond matures in 10 years. b. Jerry must report $25.60[($1,000 - $744)/10] interest income each year he owns the bond. c. The interest on the bonds is exempt from Federal income tax. d. Jerry can report all of the $256 as a capital gain in the year it matures. E 2) On a particular Saturday, Tom had planned to paint a room in his house, but his employer gave him the (1pts) opportunity to work that day. If Tom works, he must hire a painter for $120. Assuming Tom is in the 24% marginal tax bracket, how much must he get paid to be able to pay the painter and still have a positive cash flow from working? a. More than $0. b. More than $120. c. More than $158. d. More than $500.

Answer 1

Question no 1

A- TRUE- The US first EE Series savings bond has no guarantee of value at maturity, so this bonds carry a fixed rate plus an adjustable interest rate based on inflation. Jerry can defer the interest income until the bonds get maturity.

B- FALSE - Jerry will receive US EE Saving bond paper 1099-INT from that financial institution after you redeem your bonds or within the first two months after the maturity period of such bonds.

C-FALSE - interest earned from savings bonds is exempt from state and local income taxes. However, the federal income tax charge as marginal normal tax rate.

D- FALSE- The income is generate from such bonds is never treated as a long-term capital gain.

Question no 2

Option -C

120*24/1-0.24= $157.89

It means Tom must get paid more than $157.89 to pay the painter after tax deduction @24% , and Tom will have a positive figure of amount.