1. On January 1, 2019, Kunto, a cash basis taxpayer, pays $136,835 for a 24-month certificate. The certificate is priced to yield 4% (the effective interest rate) with interest compounded annually. No interest is paid until maturity, when Kunto receives $148,000.
2. In your computations, round any amounts to the nearest dollar.
3. a. Compute Kunto's gross income from the certificate for 2019.
4. b. Compute Kunto's gross income from the certificate for 2020.