Otis paid $45000 for a bond with a par value of $50000. the bond matures in five years If he does NOT choose to accrue the $5000 market discount how will he report this amount on his tax return? 1. for each year that he owns the bond, he will report a capital gain of $1000 and increase his basis by this amount. 2. He will report $5000 in taxable interest for the year upon maturity. 3. He will have a $5000 capital gain upon maturity. 4. He will have a $5000 capital loss upon maturity