Q8 (Municipal bond interest). Problem #57 a | Elbert [Hint: The face value is not relevant when calculating the gains or losses. Recall that gain = amount realized (e.g., amount received) adjusted basis (e.g., purchased cost).]

57. LO6 Determine the amount of gross income Elbert must recognize in each of the following situations: a. In October, Elbert sells city of Norfolk bonds with a face value of $6,000 for $5,800. Elbert had purchased the bonds 2 years ago for $5,200, and had received $450 in interest on the bonds before he sold them. b. Elbert owns 1,000 shares of Tortoise, Inc., common stock for which he had paid $8,000 several years ago. Tortoise declares and distributes a 20 percent stock dividend during the current year. On December 31, Tortoise common stock is selling for $10 per share. c. In December, Elbert sells city of Quebec bonds with a face value of $7,600 for $7,200. Elbert had purchased the bonds in January for $7,700 and received $950 in interest on the bonds before he sold them.