Marlene, a cash basis taxpayer, invests in Series EE U.S. government savings bonds and bank certificates of deposit (CDs). Determine the tax consequences of the following on her 2016 gross income:
a. On September 30, 2016, she cashed in Series EE bonds for $10,000. She purchased the bonds in 2006 for $7,090. The yield to maturity on the bonds was 3.5%.
b. On July 1, 2015, she purchased a CD for $10,000. The CD matures on June 30, 2017, and will pay $10,816, thus yielding a 4% annual return.
c. On July 1, 2016, she purchased a CD for $10,000. The maturity date on the CD was June 30, 2017, when Marlene would receive $10,300.