Which of the following items is not taxable on the federal return? Amount receiv
ID: 2592159 • Letter: W
Question
Which of the following items is not taxable on the federal return?
Amount received from a condemning authority to compensate for a delay in paying an award
Discount income in installment payments received on notes bought at a discount
Interest on New York State bonds
Interest on federal income tax refund
Interest on U.S. Treasury bills, notes, and bonds issued by an agency of the United States
Amount received from a condemning authority to compensate for a delay in paying an award
Discount income in installment payments received on notes bought at a discount
Interest on New York State bonds
Interest on federal income tax refund
Interest on U.S. Treasury bills, notes, and bonds issued by an agency of the United States
Explanation / Answer
Answer is Interest on New York State Bonds
This is a bond issued by New York state and Public Authorities. It is considered as debt obligations under which interest payment should be made regularly. The amount generated from the state issued bond is used for building hospitals, schools and other projects for the welfare of the public.
Since it is considered as a debt, an investor investing in New York state bonds can get interest twice in a year with the principal amount at the end of the maturity period.
In general, interest on New York state issued bonds are exempted from federal, State and Local income taxes. However, all other options given in the list are considered as taxable.
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