Question
Emrah purchased a corporate bond at its face amount of $5,000 on 1/1/2020. Under its terms, the bond pays 6% interest on 12/31 of each
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Emrah purchased a corporate bond at its face amount of $5,000 on 1/1/2020. Under its terms, the bond pays 6% interest on 12/31 of each year of its 48 month term. On June 30, 2020, Emrah sold the bond for $5,225. He is a cash basis, calendar year taxpayer. What is the amount and character (if any) of any amounts related to the bond sale that must be recognized on his 2020 return?
$225 interest income; $0 capital gain
$150 interest income; $75 short-term capital gain
$0 interest income; $225 short-term capital gain
$0 interest income; $225 long-term capital gain
Emrah purchased a corporate bond at its face amount of $5,000 on 1/1/2020. Under its terms, the bond pays 6% interest on 12/31 of each year of its 48 month term. On June 30, 2020, Emrah sold the bond for $5,225. He is a cash basis, calendar year taxpayer. What is the amount and character (if any) of any amounts related to the bond sale that must be recognized on his 2020 return?
| $225 interest income; $0 capital gain | ||
| $150 interest income; $75 short-term capital gain | ||
| $0 interest income; $225 short-term capital gain | ||
| $0 interest income; $225 long-term capital gain |
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Financial Accounting
Authors: John Hoggett, John Medlin, Keryn Chalmers, Claire Beattie, Andreas Hellmann, Jodie Maxfield
10th Edition
073036321X, 978-0730363217
