1. What is a Series EE Bond? When would a taxpayer elect to include or NOT to include the interest in income for the year?
2. In January 2018, Sonja deposited $20,000 in a bank in the Bahamas. She earned $500 interest income. She closed the account in December 2018.

a)Is Sonja subject to the FBAR reporting requirement?

b)Is the interest income taxable in the United States?

3. An employer provides all of his employees with life insurance protection equal to twice the employees annual salary. Melba, age 42, has an annual salary of $70,000. Is Melba required to recognize income even though she is still alive at the end of the year and thus nothing has been collected on the life insurance policy? Explain.
4. A taxpayer, age 64, purchases an annuity from an insurance company for $50,000. She is to receive $300 per month for life. Her life expectancy is 20.8 years from the annuity starting date. Assuming that she receives $3,600 this year, what is the exclusion percentage and how much is included in her gross income? Round the exclusion percentage to two decimal places. Round the final answer for the income to the nearest dollar.