T buys a note for its issue price of $100,000. In 5 years the note will be redeemed for what $100,000invested in the S&P at the same time the note was issued will be worth on its redemption date. However, in no event will the note be redeemed for less than $98,000 or more than $150,000 regardless of the value of the S&P 500 at the time of redemption. How will this Note be treated for tax purposes? 

What if a similar Note was issued that had a minimum redemption price of $70,000 and a maximum redemption price of $200,000? How would this Note be treated for tax purposes. For individual taxpayers in the highest marginal bracket, which Note produces better tax results? Why?