1) At the beginning of his current tax year, Eric bought a corporate bond with a maturity value of $50,000 from the secondary market for $45,000. The bond has a stated annual interest rate of 5 percent payable on June 30 and December 31, and it matures in five years on December 31.

Absent any special tax elections, how much interest income will Eric report from the bond this year and in the year the bond matures?

2) John bought 1,000 shares of Intel stock on October 18, 2013, for $30 per share plus a $750 commission he paid to his broker. On December 12, 2016, he sells the shares for $42.50 per share. He also incurs a $1,000 fee for this transaction.

a. What is Johns adjusted basis in the 1,000 shares of Intel stock?

b. What amount does John realize when he sells the 1,000 shares?

c. What is the gain/loss for John on the sale of his Intel stock?

3) Grayson is in the 25 percent tax rate bracket and has sold the following stocks in 2016: (Loss amounts should be indicated by a minus sign.)

Description	Date Purchased	Basis		Date Sold	Amount Realized
Stock A	1/23/1992	$	7,250	7/22/2016	$	4,500
Stock B	4/10/2016		14,000	9/13/2016		17,500
Stock C	8/23/2014		10,750	10/12/2016		15,300
Stock D	5/19/2006		5,230	10/12/2016		12,400
Stock E	8/20/2016		7,300	11/14/2016		3,500

a. What is Graysons net short-term capital gain or loss from these transactions?

b. What is Graysons net long-term gain or loss from these transactions?

c. What is Graysons overall net gain or loss from these transactions?

d. What amount of the gain, if any, is subject to the preferential rate for certain capital gains?