During 2013 Kay received interest income as follows:

On US Treasury certificates $4,000

On refund of 2011 federal income tax 500

The total amount of interest subject to tax in Kay’s 2013 tax return
is

(a) The requirement is to determine the amount of
interest subject to tax in Kay’s 2013 tax return. Interest must
generally be included in gross income, unless a specific statutory
provision provides for its exclusion (e.g., interest on municipal
bonds). Interest on US Treasury certificates and on a refund of
federal income tax would be subject to tax on Kay’s 2013 tax
return.