Leigh Inherited $65,000 of City of New York Bonds in January

question 1087

Essay

Leigh inherited $65,000 of City of New York bonds in January 2018. In March 2018, she received $4,000 of interest on the bonds. In July 2018, she sold the bonds at a $10,000 gain. Leigh also redeemed Series E U.S. Savings bonds in October 2018 that she had purchased several years ago and received accumulated interest of
$2,600. In December 2018, she received $800 of interest on City of Paris, France, bonds. What amount, if any, of gross income must Leigh report?

---

Definitions:

Annual Interest

Interest calculated over a 12-month period on the outstanding balance of a loan or deposit, usually compounded annually.

Second Year

Typically refers to the second year in context, such as the second year of a business's operations, investment timeline, or an academic program, denoting a stage of progression or development.

EAR

Effective Annual Rate, a comprehensive measure of the cost of borrowing on a loan or earning on an investment, taking into account the effect of compounding interest.

APR

Annual Percentage Rate; the annual rate charged for borrowing or earned through an investment, including any fees or additional costs associated with the transaction.