Exercise 13-28 (LO. 1) On July 1, 2019, Katrina purchased tax-exempt bonds (face value of $75,000) for $82,000. The bonds mature in five years, and the annual interest rate is 3%. If an amount is zero, enter "0". Determine any allocation based on months (not days). a. How much interest income and/or interest expense must Katrina report in 2019, assuming that straight-line amortization is appropriate? The interest income Katrina must include in gross income in 2019 is $ The interest expense Katrina may deduct in 2019 is $ b. What is Katrina's adjusted basis for the bonds on January 1, 2020? Katrina's adjusted basis for the bonds on January 1, 2020, is $ Check My Work Previous Next >