Lori purchased educational savings bonds to help finance her son's education. She paid $4,000 for the bonds. The bonds matured at $6,000, and the son used $2,500 to pay his tuition for the first semester. The son quit school after one semester and Lori used the remaining money to buy her son a car. If Lori's AGI is $55,000, how much interest is included in her gross income?

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Question:

Lori purchased educational savings bonds to help finance her son's education. She paid $4,000 for the bonds. The bonds matured at $6,000, and the son used $2,500 to pay his tuition for the first semester. The son quit school after one semester and Lori used the remaining money to buy her son a car. If Lori's AGI is $55,000, how much interest is included in her gross income?

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Answer:$1,167 nterest is included in her gross income.Explanation:Interest in this case = $6,000 - $4,000                                  =  $2,000 Amount invested = 2,500/6000                              = 41.67% Interest excluded = 2,000*41.67%                               = $833 interest included in Lori’s AGI = $2,000 – $833                                                   = $1,167 Therefore, $1,167 nterest is included in her gross income.

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