1. Cecil cashed in a Series EE savings bond with a redemption value of $21,500 and an original cost of $15,050.

For each of the following independent scenarios, calculate the amount of interest Cecil will include in his gross income assuming he files as a single taxpayer: (Leave no answer blank. Enter zero if applicable.)

a. Cecil plans to spend all of the proceeds to pay his sons tuition at State University. Cecils son is a full-time student, and Cecil claims his son as a dependent. Cecil estimates his modified adjusted gross income at $70,600.

b. Assume the same facts in part (a), except Cecil plans to spend $6,450 of the proceeds to pay his sons tuition at State University, and Cecil estimates his modified adjusted gross income at $67,600.

2. Bart is the favorite nephew of his aunt Thelma. Thelma transferred several items of value to Bart. For each of the following transactions, determine the effect on Barts gross income. (Leave no answer blank. Enter zero if applicable.)

a. Thelma gave Bart an auto worth $29,200. Thelma purchased the auto three years ago for $23,000.

b. Thelma elects to cancel her life insurance policy, and she gives the cash surrender value of $18,600 to Bart.

c. Bart is the beneficiary of a $160,000 whole life insurance policy on the life of Thelma. Thelma died this year, and Bart received $160,000 in cash. d. Bart inherited 500 shares of stock from Thelmas estate. Thelma purchased the shares many years ago for $2,400, and the shares are worth $69,000 at her death.

3. Grady received $8,960 of Social Security benefits this year. Grady also reported salary and interest income this year. What amount of the benefits must Grady include in his gross income under the following five independent situations? (Leave no answer blank. Enter zero if applicable.)

b. Grady files single and reports salary of $24,090 and interest income of $790.

c. Grady files married joint and reports salary of $78,800 and interest income of $690.

d. Grady files married joint and reports salary of $44,000 and interest income of $890.

e. Grady files married separate and reports salary of $24,090 and interest income of $790.