Olga had interest of $200 credited to a frozen bank deposit in 2012; she was able to withdraw $180 by the end of the year. For 2012, $180 is reported as interest income. In 2013, Olga is able to withdraw the remaining $20 in interest. How much interest is included in Olga”s income in 2013?
a. Incorrect. Interest income on a frozen account becomes taxable if it is paid out or becomes available for withdrawal by the taxpayer.
b. Correct. The remaining $20 of interest was available for withdrawal in 2013, so it is taxable to Olga in that year.
c. Incorrect. The $180 of interest received in 2012 was included in Olga”s taxable income in 2012 because the funds were made available.
d. Incorrect. $180 of the interest was taxable in 2012 and the remaining $20 is taxable in 2013.
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