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12 November, 14:09

Heather's interest and gains on investments for the current year are as follows: Interest on Madison County school bonds $600 Interest on U. S. government bonds 700 Interest on a Federal income tax refund 200 Gain on the sale of Madison County school bonds 500 Heather must report gross income in the amount of: a.$2,000. b.$1,400. c.$1,300. d.$1,800. e. None of these choices are correct.

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  1. 12 November, 14:21
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    Option (b) is correct.

    Explanation:

    Given that,

    Interest on Madison County school bonds = $600

    Interest on U. S. government bonds = $700

    Interest on a Federal income tax refund = $200

    Gain on the sale of Madison County school bonds = $500

    Gross income:

    = Interest on U. S. government bonds + Interest on a Federal income tax refund + Gain on the sale of Madison County school bonds

    = $700 + $200 + $500

    = $1,400

    Note: Interest on Madison County school bonds is exempt from the calculations of gross income.
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