Marlene, a cash basis taxpayer, invests in Series EE U.S. government savings bonds and bank certificates of

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Marlene, a cash basis taxpayer, invests in Series EE U.S. government savings bonds and bank certificates of deposit (CDs). Determine the tax consequences of the following on her 2017 gross income:

a. On September 30, 2017, she cashed in Series EE bonds for $10,000. She purchased the bonds in 2007 for $7,090. The yield to maturity on the bonds was 3.5%.

b. On July 1, 2016, she purchased a CD for $10,000. The CD matures on June 30, 2018, and will pay $10,816, thus yielding a 4% annual return.

c. On July 1, 2017, she purchased a CD for $10,000. The maturity date on the CD was June 30, 2018, when Marlene would receive $10,300. 

Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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South-Western Federal Taxation 2018 Comprehensive

ISBN: 9781337386005

41st Edition

Authors: David M. Maloney, William H. Hoffman, Jr., William A. Raabe, James C. Young

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