Jason Owns Blue Corporation Bonds (Face Value of $10,000), Purchased

question 113

Multiple Choice

Jason owns Blue Corporation bonds (face value of $10,000) , purchased on January 1, 2017, for $11,000. The bonds have an annual interest rate of 6% and a maturity date of December 31, 2026. If Jason elects to amortize the bond premium, what is his taxable interest income for 2017 and the adjusted basis for the bonds at the end of 2017 (assuming straight-line amortization is appropriate) ?

• A)$600 and $11,000
• B)$600 and $10,900
• C)$500 and $11,000
• D)$500 and $10,900
• E)None of the above

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Definitions:

Enzyme

Protein or RNA that speeds up a reaction without being changed by it.

Reverse Transcriptase

An enzyme that synthesizes DNA from an RNA template, essential in the replication of retroviruses.

Single-stranded DNA

A structure of DNA consisting of only one strand as opposed to the normal double-stranded DNA, often used in various biotechnological processes.

Recombinant DNA

DNA molecules formed by laboratory methods of genetic recombination to bring together genetic material from multiple sources, creating sequences that would not otherwise be found in biological organisms.