Which One of the Following Statements Concerning the Tax Treatment

question 124

Multiple Choice

Which one of the following statements concerning the tax treatment of municipal bonds is correct?

• A) The interest income on municipal bonds is subject to federal income tax.
• B) The capital gain realized on the sale of a municipal bond is tax-free income.
• C) Interest income on a municipal bond is usually exempt from state and local income taxes if the bond is issued by the state or locality in which the investor resides.
• D) Municipal bonds receive no special income tax treatment.

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