Question

Lori purchased educational savings bonds to help finance her son's education. She paid $4,000 for the bonds. The bonds matured at $6,000, and the son used $2,500 to pay his tuition for the first semester. The son quit school after one semester and Lori used the remaining money to buy her son a car. If Lori's AGI is $55,000, how much interest is included in her gross income?

Answer 1

$1,167 nterest is included in her gross income.

Step-by-step explanation:

Interest in this case = $6,000 - $4,000

= $2,000

Amount invested = 2,500/6000

= 41.67%

Interest excluded = 2,000*41.67%

= $833

interest included in Lori’s AGI = $2,000 – $833

= $1,167

Therefore, $1,167 nterest is included in her gross income.