Question

Elmer received the following distributions from Virginiana Mutual Fund for the calendar year 2019: Ordinary dividends $250 Capital gain distributions $170 Nontaxable distributions $80 Elsie, Elmer's wife, did not own any of the Virginiana Mutual Fund shares, but she did receive $1,475 in interest on a savings account at the Moss National Bank and $175 in interest on California Municipal Bonds. Elmer and Elsie filed a joint income tax return for 2019. What amount is reportable as taxable interest income? a. $175 b. $0 c. $1,650 d. $1,475 e. None of these choices are correct.

Answer 1

Answer:

d. $1,475

Explanation:

The computation of the taxable interest income is shown below:

Since it is given that the Elmer received the interest on a saving account for $1,475 and the same is considered for taxable interest income because the interest on California Municipal Bonds i.e $175 is not considered as a taxable income

So in this case only $1,475 is relevant and held for taxable interest income