Question

CCH Federal Taxation-Comprehensive Topics 35. Beth, who is single, redeems her Series EE . bonds. She receives $12,000, consisting of $8,000 principal and $4,000 interest. Beth's qualified educational expenses total $16,500. Further, Beth's adjusted gross income for the year is $40,000. Determine what, if any, interest income Beth must include in her gross income. 36. Linda Sue Carr worked for a large food brokerage firm. In January of this year she was terminated. After a court battle Linda Sue was reinstated in her job and received from the firm in November $7,500 in punitive damages. Must Linda Sue include the $7,500 in punitive damages in her 2019 gross income? 37. Steven Spokesman, a high school teacher in a local school district, was fired for publicly criticizing the local school district. The cour 11 . freedom of speech had

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Answer is highlighted in yellow: Solution: $0 Answer:35) Explanation: Beth's qualifying educational expenses exceeds total proceed from EE bonds. Her AGI is below the threshold limit. Beth need not to include any of interest income in her gross income. Yes Answer:36) Explanation: As per IRS, all punitive damages received are taxable and must be reported as other income. It is standardized. No further explanation require.