In 2016, Uriah Received the Following Interest Payments: ​

question 99

Multiple Choice

In 2016, Uriah received the following interest payments: ​
Interest of $300 on an overpayment of 2015 Federal income taxes
Interest of $400 from his bank certificate of deposit.
Interest of $1,000 on municipal bonds
Interest of $1,500 on United States savings bonds (Series HH)
​
What amount, if any, should Uriah report as taxable interest income on his 2016 individual income tax return?

• A)$0
• B)$700
• C)$2,200
• D)$3,200
• E)None of the above

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Definitions:

Nominal Interest Rate

Nominal interest rate is the stated or face interest rate on a loan or financial product, not adjusted for inflation, representing the actual percentage charged on the principal amount.

Expected Rate

The anticipated return on an investment, often based on historical performance and future projections.

Inflation

The inflationary pace at which prices for all goods and services mount, lessening purchase value.

Nominal Interest Rate

The interest rate before adjustments for inflation, representing the rate of interest charged by banks or paid on investments.