On December 31, 2015, Phil purchased $20,000 of newly issued bonds of Texas Corporation for $16,568. The

Question:

On December 31, 2015, Phil purchased $20,000 of newly issued bonds of Texas for $16,568. The bonds are dated December 31, 2015. The bonds are 9%, 10-year bonds paying interest semiannually on June 30 and December 31. The bonds are priced to yield 12% compounded semiannually.
a. What is the amount of the original issue discount?
b. For the first semiannual period, what is the amount of the original issue discount Phil must recognize as ordinary income?
c. What is the total amount of interest income Phil must recognize in 2016?
d. What is Phil's basis for the bonds as of December 31, 2016?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...