Question
Taxpayer A purchased a newly issued $20,000 corporate bond for $19,500 on November 1, 2020. The bond matures on October 31, 2025 and has an
Taxpayer A purchased a newly issued $20,000 corporate bond for $19,500 on November 1, 2020. The bond matures on October 31, 2025 and has an annual interest rate is 5% which is paid on October 31 of each year. What is the total interest income taxpayer A must report on their 2020 and 2021 tax returns if they want to minimize the interest recognized for tax purposes?
| $0 in 2020 and $1,000 in 2021 | |
| $167 in 2020 and $833 in 2021 | |
| $0 in 2020 and $975 in 2021 | |
| $167 in 2020 and $1,000 in 2021 |
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
9781285586618
