In 2018, Mr. Yang paid $160,000 for a corporate bond with a $200,000 stated redemption value. Based on the bond's yield to maturity, amortization of the $40,000 discount was $3,024 in 2018 and $2,960 in 2019. Mr. Yang sold the bond for $169,500 in December 2019. What are his tax consequences in each year assuming that:a. He bought the newly issued bond from the corporation?b. He bought the bond in the public market through his broker?
What will be an ideal response?
a. $3,024 interest income in 2018; $2,960 interest income in 2019; $3,516 capital gain ($169,500 sales price - [$160,000 cost + $5,984 capitalized OID]) in 2019.
b. No tax consequences in 2018; $3,516 capital gain and $5,984 ordinary income in 2019.
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________ is defined as a collection of assertions that specify how and why variables are related, as well as the conditions in which they should and should not be related.
A. Data B. Hypothesis C. Paradigm D. Information E. Theory