You purchase 20 bonds with a $1,000 par, an 8% coupon rate (with semiannual payments), and 10 years until maturity. Your total purchase price is $17,000 plus $560 in accrued interest. You receive one coupon payment during the rest of that year.

a. If you are in the 28% tax bracket, how much tax do you pay that year on the bonds?

b. Assume that you are the seller of the bonds rather than the buyer, and that you also are in the 28% income tax bracket. How much tax do you pay that year on the bonds?

c. Why are your answers to parts b and c different?