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tuition and fees required for the enrollment or attendance of the
taxpayer at an eligible educational institution. Section 135(a)
specifically requires qualified education expenses to be paid
during the taxable year in which the bonds were redeemed.
Petitioner redeemed her bonds in 2000. Respondent does not
dispute that petitioner was enrolled at Palo Alto College (PAC)
in San Antonio, Texas, as a freshman in January 2001, but
respondent has no information on petitioner's academic standing
during 2000, the taxable year at issue. Further, petitioner has
not provided respondent with documentation showing that she paid
qualified education expenses in 2000. The records petitioner
provided show that all of her payments for tuition and fees to
PAC were made during 2001.
Section 135(c) states that in order for a savings bond to be
a "qualified United States savings bond" it must have been issued
after December 31, 1989. Mr. Medina testified that he began
purchasing the bonds in 1982 when his daughter was born.
Petitioner produced no evidence that either of the bonds was
purchased after December 31, 1989. The Court, therefore, cannot
find that section 135 is applicable to this case.
Because petitioner has not shown that she redeemed qualified
savings bonds and that she had qualified higher education
expenses in 2000, the Court holds that petitioner was required to
report $3,531 of interest income on her 2000 tax return.
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