Determine the tax advantage from bond


Response to the following problem:

A Series EE U.S. government savings bond accrues 3.5% interest each year. The bond matures in three years, at which time the principal and interest will be paid. The bank will pay the taxpayer at a 3.5% interest rate each year if he agrees to leave money on deposit for three years.

What tax advantage does the Series EE bond offer that is not available with the bank deposit?

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Taxation: Determine the tax advantage from bond
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