Hersh inherits $50,000 from his grandfather. He receives the money on January 1 and immediately invests $25,000

Question:

Hersh inherits $50,000 from his grandfather. He receives the money on January 1 and immediately invests $25,000 in General Motors bonds that pay 8% annual interest and $25,000 in Lane County highway improvement bonds with a 6% annual interest rate.

Identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each issue that you identify.