Gross Income—Concepts, Interest, and Dividends

Question 1

Bond premiums

Answer 1

b. The amortization reduces the basis of the bond.
c. The amortization offsets the interest income from the bond.
d. The amortized bond premium is computing using the constant yield to maturity method.

Question 2

1040EZ

Answer 2

Itemizing deductions is not an option on the 1040EZ form. Thus, when taxpayer file 1040EZ in the prior year, state and local income tax refund is not taxable, but interest received on the refund is still taxable.