Two years ago, Mr. Young paid $40,000 to buy a publicly traded corporate bond through his broker. The bond's stated redemption value was $45,000. This year, Mr. Young sold the bond for $47,100. Compute and characterize his gain or loss on sale.
A. $7,100 ordinary income.
B. $2,100 long-term capital gain.
C. $7,100 long-term capital gain.
D. $5,000 ordinary income and $2,100 long-term capital gain.
Answer: D
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