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On December 31, 2020, Earl purchased $19,000 of newly issued bonds of Savvy Corporation for $15,450. The bonds are dated December 31, 2020. The
On December 31, 2020, Earl purchased $19,000 of newly issued bonds of Savvy Corporation for $15,450. The bonds are dated December 31, 2020. The bonds are 7%, 10-year bonds paying interest semiannually on June 30 and December 31. The bonds are priced to yield 10% compounded semiannually. Read the requirements Requirement a. What is the amount of the original issue discount? Start by completing the bond amortization table for the first year. (Round all amounts to the nearest dollar.) Year Interest Received December 31, 2020 June 30, 2021 December 31, 2021 Amortization of Original Issue Discount Taxpayers Basis Interest Income. for the Bond The amount of the original issue discount is Requirement b. For the first semiannual period, what is the amount of the original issue discount Earl must recognize as ordinary income? (Round the amount to the nearest dollar) The amount of the original issue discount Earl must recognize as ordinary income for the first semiannual period is Requirement c. What is the total amount of interest income Earl must recognize in 20217 (Round the amount to the nearest dollar) The total amount of interest Earl must recognize in 2021 is Requirement d. What is Earl's basis for the bonds as of December 31, 2021? (Round the amount to the nearest dollar.) The basis for the bonds as of December 31, 2021 is
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