Question
California 540 Ed and Tracys daughter, Shelly, is a freshman in college. During the tax year, they received a distribution from the Coverdell ESA they
California 540
Ed and Tracys daughter, Shelly, is a freshman in college. During the tax year, they received a distribution from the Coverdell ESA they set up for their daughters education, which exceeded her qualified education expenses. The taxable amount of the distribution was $500. How much additional tax on the distribution will they owe and where will Ed and Tracy report it on their Form 540? a) $50 should be reported on line 63. b) Coverdell ESA distributions are tax-free. c) $12.50 should be reported on line 63. d) $50 should be reported on line 34
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