Lana earned $100 interest from a California municipal bond and $30 from an Arizona municipal bond. What amount is taxable income for her California tax return that is not taxable on her Federal return

Lana

$30 is taxable income for her California tax return, but not taxable on her Federal tax return.

Explanation:

a) Data:

Interest earned from California municipal bond = $100

Interest earned from Arizona municipal bond = $30

b) Lana is a confirmed resident of California, based on the facts of this case.  Lana's income from investing in municipal bonds is generally exempt from Federal and state taxes for residents of the issuing state.  This implies that her income from the California bond is tax-exempt.  But her income from the Arizona municipal bond of $30 is not tax-exempt in California.  At the federal level, all two sources of her income are tax-exempt.

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