Frank received $4,800 as interest income and also paid an early withdrawal penal

Question

Frank received $4,800 as interest income and also paid an early withdrawal penalty of $1,200 on a certificate of deposit he had at the local bank. Which of the following is the correct way for Frank to report these items on his tax return?
1)include $3,600 interest in gross income

2)include $4,800 interest in gross income

3)include $4,800 interest in gross income and deduct $1,200 as an adjustment to income

4)include $4,800 interest in gross income and deduct $1,200 as an itemized deduction

the answer is not nbr 4, so the question you must know to answer this question is if the 1200 is deductable for early withdrawal....no this answer to answer the question...

Explanation / Answer

1) include $3600 interst in gross income. This is nothing but the net reliasable value of the asset that is income less bank loss in bank

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