Asked by Kiauna Floyd on May 09, 2024
Verified
Owners of bonds that were issued by the federal government are not required to pay federal income tax on the interest income.
Federal Income Tax
A tax levied by the United States federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.
Bond Owners
Individuals or institutions that hold debt securities issued by corporations or governments, entitling them to receive fixed interest payments.
- Discern the taxation effects on different forms of bond income.
Verified Answer
RD
Reagan DeweyMay 15, 2024
Final Answer :
False
Explanation :
Interest income from bonds issued by the federal government, such as U.S. Treasury bonds, is subject to federal income tax, but it is often exempt from state and local income taxes.
Learning Objectives
- Discern the taxation effects on different forms of bond income.