In the current year, Dylan earned taxable and tax-exempt interest from the following investments.
Investment.......................................... Interest Income
10-year municipal bond (issued in 2009).................. $1,300
10-year private activity bond (issued in 2010).............. 1,600
10-year Treasury bond (issued in 2013)..................... 2,000
10-year private activity bond (issued in 2014)................ 900
Savings account .................................................1,100
Dylan purchased all of the bonds on their issuance date. In addition, Dylan borrowed funds with which to purchase the 2010 private activity bond and incurred interest expense of $350 on that loan in the current year.
a. How much interest income will Dylan recognize for regular tax purposes in the current year?
b. What is her current-year AMT preference or adjustment for interest income?