Which of the following is not a true statement regarding municipal bonds?

a. A municipal bond is a debt obligation issued by state or local governments.

b. A municipal bond is a debt obligation issued by the federal government.

c. The interest income from a municipal bond is exempt from federal income taxation.

d. The interest income from a municipal bond is exempt from state and local taxation in the issuing state.

Question

Dania Riggs

Social Studies

29 July, 10:20

Which of the following is not a true statement regarding municipal bonds?

a. A municipal bond is a debt obligation issued by state or local governments.

b. A municipal bond is a debt obligation issued by the federal government.

c. The interest income from a municipal bond is exempt from federal income taxation.

d. The interest income from a municipal bond is exempt from state and local taxation in the issuing state.

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Answers (1)

Know the Answer?

Itzel Benson · Answer 1

b. A municipal bond is a debt obligation issued by the federal government.

Explanation:

The municipal bond is commonly called as the Muni Bond, is the bond which is issued by the local government or the territory. The municipal bond is used to finance the public projects generally.

Hence, Option A is correct. Option B is incorrect.

The interest income which is received by municipal bonds' holders is excludable often from the gross income for the purposes of the federal income tax and it is exempted from the state and the local income tax.

Hence, Option C and D are correct.