Tyler is 18 years old. He has $3,000 worth of EE bonds in his name. He received the bonds as gifts over the years. He is hoping to cash in the bonds and use the proceeds for college. Which of the following statements is true in relation to his goal?

A. Because he is younger than age 24, he will need to pay taxes on the interest earned when the bonds are redeemed.

B. Because he is younger than age 24 and single, he will not owe taxes when the bonds are redeemed.

C. Because he received the bonds as a gift, he must pay taxes on the full amount of the redemption.

D. Because he is using the bonds for college, he will not owe taxes when the bonds are redeemed.

Question

Lance Lynn

Business

21 May, 15:17

Tyler is 18 years old. He has $3,000 worth of EE bonds in his name. He received the bonds as gifts over the years. He is hoping to cash in the bonds and use the proceeds for college. Which of the following statements is true in relation to his goal?

A. Because he is younger than age 24, he will need to pay taxes on the interest earned when the bonds are redeemed.

B. Because he is younger than age 24 and single, he will not owe taxes when the bonds are redeemed.

C. Because he received the bonds as a gift, he must pay taxes on the full amount of the redemption.

D. Because he is using the bonds for college, he will not owe taxes when the bonds are redeemed.

+5

Answers (1)

Know the Answer?

Antony Villarreal · Answer 1

Answer: C. Because he received the bonds as a gift he must pay taxes on the full amount of the redemption

Explanation:

When a bond is transferred to some else as a gift be it a child, friend spouse etc, All taxes associated with a will be owed by the receiver of the bond gift. The receiver of the bond will have to pay all taxes owed when the bond matures or when the bond is cashed in, which ever happens first