Sam, Age 45, Saved Diligently for His College Education by Putting

question 59

Multiple Choice

Sam, age 45, saved diligently for his college education by putting part of his pay into U.S. Series EE savings bonds. Sam purchased the bonds for $6,500, and this year he redeemed the bonds for $7,200. He has no other income this year. What amount must Sam include in his gross income?

• A)$7,200
• B)$6,500
• C)A maximum of $350 if Sam uses the proceeds to pay for his college tuition and fees.
• D)$700 unless Sam uses at least some portion of the proceeds to pay for his college tuition and fees.
• E)$0-proceeds from cashing bonds sold at a discount are not realized income.

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Definitions:

Endorphins

Endorphins are neurotransmitters in the brain that act as natural painkillers and mood elevators, often released in response to stress and pain.

Morphine

A potent opiate analgesic drug derived from the opium poppy, used to treat severe pain.

Codeine

An opiate used to treat pain, as a cough suppressant, or occasionally in the treatment of diarrhea.

Neurotransmission

The process by which nerve cells (neurons) communicate with each other through the exchange of chemical messengers called neurotransmitters.