[1] Gary and Gladys invest in bonds. In the current year, they received the following interest: California general revenue bonds $ 800 New York City sanitation fund bonds 1,000 Seattle School District bonds 400 AT&T 20-year bonds 600 The state and local bonds are neither private activity bonds nor arbitrage bonds. How much interest income may Gary and Gladys exclude from gross income on their joint return? A. $0 B. $800 C. $1,800 D. $2,200

[2] Which of the following distributions is nontaxable?

A.Mutual fund distribution from its net realized long-term capital gains in the amount of $1,000. You have an adjusted basis of $10,000 in the mutual fund. B. Return of capital distribution from a utility company in the amount of $2,000. You have a zero basis in this stock. C. Dividend on insurance policy in the amount of $1,000. As of the date of this dividend, your net premiums exceed the total dividends by $3,500. D. Your $25,000 share of ordinary income earned in the current year by an S corporation. [3] Which of the following bonds can be a tax-exempt bond if issued in the current year so that the interest therefrom may be excluded from gross income? A. $1 million of bonds issued by a municipality with 50% of the proceeds to be used by a private developer to create an industrial neighborhood of offices and warehouses. The developer will use sales and rents to repay 50% of the bond issue. B.$1 million of bonds issued by a city with 50% of the proceeds to be invested in higher-yielding corporate bonds. C. $1 million of bonds issued by a state with all the proceeds to be used to finance student loans. D. $1 million of bonds issued by a city with all the proceeds to be used to help finance a sports stadium owned by a nongovernment company. 4] In December 2013, Fred and Tina, a married couple, cashed qualified Series EE U.S. Savings Bonds, which they had purchased in January 2012. The proceeds were used to help pay for their son