Question

George, an unmarried cash basis taxpayer, received the following amounts during 2014:

Interest on savings accounts $2,000
Interest on a State tax refund 600
Interest on City of Salem school bonds 350
Interest portion of proceeds of a 5% bank certificate of deposit purchased on July 1, 2013, and matured on June 30, 2014 250
Dividends on USG common stock 300
What amount should George report as gross income from dividends and interest for 2014?
a. $2,300.
b. $2,550.
c. $3,150.
d. $3,500.
e. None of these.

Answer 1

George should report $600 as gross income from dividends and interest for 2014.

Step-by-step explanation:

George should report $600 as gross income from dividends and interest for 2014.

Gross income from dividends and interest includes the interest on savings accounts, interest on a state tax refund, interest on city of Salem school bonds, interest on a bank certificate of deposit, and dividends on USG common stock.

In this case, the interest on savings accounts is $2,000, the interest on a state tax refund is $600, the interest on city of Salem school bonds is $350, the interest on the bank certificate of deposit is $250, and the dividends on USG common stock is $300. Adding all these amounts gives a total of $3,500, but since George is an unmarried cash basis taxpayer, he can only report $600 as gross income from dividends and interest.