please help with question attach to photo question 3-61. thanks. discusses the t

Question

please help with question attach to photo question 3-61. thanks.

discusses the tax consequences for both Jim and Linda. 13-6 John and Mary (your clients) have two small children and are looking for ways to help fund the children's college education. They have heard that Series EE bonds are a tax- favored way of saving and have requested your opinion on the tax consequences. They have asked your opinion regarding the relative advantages of purchasing Series EE bonds in their names versus the children's names. John and Mary have indicated that they expect to have a high level of income in the future and that their children may receive other in- come sources from future inheritances. Prepare a client memo making recommendation about the tax consequences of Series EE bond investments for John and Mary lee and lane have h 13-6

Explanation / Answer

John & Mary

You have shown your interest in investment in Series EE bonds. These are low-risk saving products that pay interest for upto 30 years. These bonds are issued in electronic form, hence you can purchase, manage, and redeem EE bonds from your laptop (computer).

The objective of these bonds is to finance education. Interest is added monthly and accumulated to be paid with principal, when you cash these bonds.

Purchase of these bonds are exempt from tax from the gross income, however interest earnings are subject to tax. Part of the interest paid upon the redemption can get tax benefit, when the owner pays qualified higher education expenses at an eligible institution.

Thanks

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