Party A and B enter into a contract. The contract is based on notional amount of $50 million. A pays 1 year LIBOR and B pays a fixed rate 5% .In year 1, LIBOR is 4% and payments are made annually. A and B entered into the swap on September 1, 2016. A and B are both calendar year taxpayers.

A.Is this contract a notional principal contract?

B. Are the payments periodic?

C. How much income and expense do A and B have in 2016

D. Would the answer in C change if A was a cash method taxpayer?