AICPA Exam CPA-Regulation Topic 1 Question 12 Discussion

Choice 'a' is correct. One of the conditions that must be met for tax exemption of accumulated interest on the bonds is that the purchaser of the bonds must be the sole owner of the bonds (or joint owner with his or her spouse).

Choice 'b' is incorrect. The bonds must be bought and put in the name of the owner or co-owner, not in the name of the dependent child.

Choice 'c' is incorrect. The owner must be at least 24 years old before the bonds issue date.

Choice 'd' is incorrect. There is no requirement that the bonds must be transferred to the college for redemption by the college rather than by the owner of the bonds.