Question 18

Choose the response that correctly completes the following sentence describing the tax treatment and reporting requirements for municipal bond interest. Interest income from this type of investment is:

A. Federally taxable and must be reported on Form 1040.

B. Nontaxable and does not have to be reported.

C. Not federally taxable but must be reported on Form 1040.

D. Not federally taxable and only reportable on Form 1040 when the amount received exceeds $1,500.