Cynthia Medina - Page 5

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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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