Duncan Purchased State of Wisconsin General-Purpose Bonds at a Cost

question 138

Multiple Choice

Duncan purchased State of Wisconsin general-purpose bonds at a cost of $3,400 in 2011.He receives $170 interest on the bonds in 2011,2012,and 2013.In 2013,he sells the bonds for $3,800.Duncan excludes the bond interest,but must include a $400 capital gain in his 2013 gross income.Which of the following Concepts,Constructs,and/or Doctrines help in forming the basis for this treatment?
I.Capital Recovery Concept.
II.Legislative Grace Concept.

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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