During the year, Fran earned $18,000 of interest income on 2005 private activity bonds. She incurred interest

Question:

During the year, Fran earned $18,000 of interest income on 2005 private activity bonds. She incurred interest expense of $7,000 in connection with amounts borrowed to purchase the bonds. What is the effect of these items on Fran's taxable income? On her AMT? Could there be a related beneficial effect in calculating AMTI? Explain.