Question

George, an unmarried cash basis taxpayer, received the following amounts during 2016:Interest on savings accounts$2,000Interest on a State bond600Interest on City of Salem school bonds350Interest portion of proceeds of a 5% bank certificate of deposit purchased on July 1, 2015, and matured on June 30, 2016250Dividends on USG common stock300What amount should George report as gross income from dividends and interest for 2016?a. $2,550b. $3,500c. $3,150d. $2,300e. None of these choices are correct.

Answer 1

c. $3,150

Step-by-step explanation:

The computation of the gross income is shown below:

= Interest on savings accounts + Interest on a State bond + Interest portion of proceeds of a 5% bank certificate of deposit + Dividends on USG common stock

= $2,000 + $600 + $250 + $300

= $3,150

We do not consider the school bonds as it would not be included in the gross income. So, we ignored it