Under the Original Issue Discount (OID) Rules as Applied to a Three-Year

question 65

Multiple Choice

Under the original issue discount (OID) rules as applied to a three-year certificate of deposit:

• A) All of the income must be recognized in the year of maturity by a cash basis taxpayer.
• B) The OID will be included in gross income for the year of purchase.
• C) The interest income will be the same each year.
• D) The interest income will be greater in the third year than in the first year.
• E) None of the above is correct.

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The value of one currency for the purpose of conversion to another, determining how much of one currency can be exchanged for another, influenced by market conditions, economic factors, and government policies.

Currency

A system of money in general use in a particular country or region, facilitating trade and economic transactions.