Multiple Choice\ Interest income from municipal bonds is excluded from gross income.\ Exclusions are favorable because taxpayers never pay tax on income that is excluded.\ Deferrals are income items taxpayers realize in one year but include in gross income in a subsequent year.\ An income item need not be realized in order to qualify as an exclusion item.

Multiple Choice Interest income from municipal bonds is excluded from gross income. Exclusions are favorable because taxpayers never pay tax on income that is excluded. Deferrals are income items taxpayers realize in one year but include in gross income in a subsequent year. An income item need not be realized in order to qualify as an exclusion item