In 2012, Harley and Madison purchased Series EE bonds, and in 2016 redeemed the bonds, receiving $700 of interest and $32,500 of principal. Their income from other sources totaled $24,000. They paid $3,400 in tuition and fees for their dependent daughter. Their daughter is a qualified student at State University.

a.) How much of the Series EE bond interest is excludable?

b.) Assuming that the daughter received a $2,760 scholarship, how much of the interest is excludable? Ignore any tax credits that might be available.

c.) Assuming the daughter received the $2,760 scholarship and that the parents' income from other sources is $123,100, how much of the interest is excludable?