Question: In the current year, Ms . Smith withdrew her funds from a time - savings account before maturity and was charged a penalty of $

In the current year, Ms. Smith withdrew her funds from a time-savings account before maturity and was charged a penalty of $2,000 for early withdrawal. The interest earned on the account in the current year was $1,600. Ms. Smith had no other interest income. How should Ms. Smith report this transaction on her current-year individual income tax return?

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