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B) Interest earned, despite the fact that paid, throughout a bond year, must be accrued after the bond year and reported as taxable income for that calendar year in in which the bond year ends.

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If the $30,000 yearly person do not transfer pricing contribute to his IRA, he'd end up with $850 more on his pocket than if he contributed. But, having contributed, he's got $1,000 more in his IRA and $150, instead of $850, with his pocket. So he's got $300 ($150+$1000 less $850) more to his track record having contributed.

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