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In 2023, Mr. and Mrs. Smith redeem Series EE bonds and receive $10,000, consisting of $6,500 of principal and $3,500 of interest. Net qualifying educational expenses total $7,500. They are married filing jointly and have other AGI of $146,300. How much interest income must be included in their income in 2023 because of the redemption of savings bonds? a. $1,925 b. $2,450 c. $3,500 d. $875 e. None of the answers provided is correct. .24% 146,30 2. Luke is the sole shareholder of Rider Corporation. The basis of his stock is $80,000. Rider distributes $270,000 to Luke in 208. Earnings and profits for Rider are $120,000. Which of the following statements is true regarding this distribution? a. Luke will report $120,000 dividend in 20X8 with a remaining stock basis of $80,000. b. Luke will report $190,000 dividend in 208 with a remaining stock basis of zero. c. Luke will report $120,000 dividend and $70,000 capital gain in 20X8. d. Luke will report a $190,000 capital gain in 20X8. e. None of the answers provided is correct. 3. Gary purchased an annuity contract for $77,760 for which he is to receive $900 per month starting September 1,20X7, and continuing for life. He has a life expectancy of 24 years. What is the amount of Gary's annuity income that must be included in his gross income for 207 ? a. $3,600 b. $2,520 c. $1,080 d. $7,560 e. None of the answers provided is correct. 4. Which of the following items are generally not excluded from taxation? a. The value of a property settlement received pursuant to a divorce settlement. b. Interest on corporate bonds. c. Interest on state and local government bonds. d. Life insurance proceeds paid on the death of the insured. e. None of the answers provided is correct

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