SIE practice questionmediumTreasury Securities
Interest paid by Treasury securities is subject to which tax treatments?
- AFederal income tax but exempt from state and local✓ Correct answer
- BFederal and state income tax
- CCapital gains tax only
- DNo tax at all
Explanation
Why A — Federal income tax but exempt from state and local
Treasury interest is subject to federal but not state or local tax. Capital gains are taxed when realized; no U.S. security is entirely tax-free.
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