On January 1, 2021, Kunto, a cash basis taxpayer, pays $46,228 for a 24-month certificate of deposit.
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On January 1, 2021, Kunto, a cash basis taxpayer, pays $46,228 for a 24-month certificate of deposit. The certificate is priced to yield 4% (the effective interest rate) with interest compounded annually. No interest is paid until maturity, when Kunto receives $50,000.
a. Compute Kunto’s gross income from the certificate for 2021.
b. Compute Kunto’s gross income from the certificate for 2022.
Round all calculations to the nearest dollar.
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Related Book For 
South-Western Federal Taxation 2022 Individual Income Taxes
ISBN: 9780357519073
45th Edition
Authors: James C. Young, Annette Nellen, William A. Raabe, Mark Persellin, William H. Hoffman
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