George Sargent built individual homes for 25 years. He completed about 1,000 lower-priced homes each year. Most of his potential buyers had low credit ratings and could not obtain a mortgage from traditional sources. Sargent entered a working relationship with a few small independent local banks, including Friendly State Bank, Neighborhood Savings and United Bank. The banks charged a high interest rate on the mortgage loans obtained to purchase Sargent's homes. The banks appreciated Sargent's referral of customers to them. Each bank gave him a United States Savings Bond that cost $750 and had a maturity value of $1,000.

 

            In March, 2023, Sargent closed his business. In April, 2023, the government charged him  with tax evasion for failing to report the bonds that he received over the years. He could not afford an attorney to defend himself. The Friendly State Bank president, Roger Bankman, took George and his wife out to dinner in May, 2023 and presented him with a check for $10,000.

 

What are George's 2023 federal income tax consequences, if any, resulting from the receipt of the savings bonds from the banks and the check from Roger Bankman?

Answer rating: 100% (QA)

George Sargent may have federal income tax consequences in 2023 related to the receipt of savings bo... View the full answer