1. 2. Interest income received state and local government bonds are taxable to the recipient at a maximum federal income tax rate of 5%. A dividend on life insurance is excluded from the recipient's gross income. 3. The cost of group term life insurance provided by an employer is fully taxable to the employee if the coverage amount is directly proportional to employee salaries. 4. The donor of a gift may claim a tax deduction for the property transferred. Parties holding title to property as tenants in common will be taxed equally on income produced by the property regardless of their contribution of ownership of the property. 5