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

question 71

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 these is correct.

---

Definitions:

Applied Geology

Applied geology is the practical application of geological principles and techniques to solve problems in everyday life, including engineering, environmental assessments, and natural resource management.

Divergent

Moving or extending in different directions from a common point; in thinking, it refers to exploring many possible solutions or ideas.

Decisive

Characterized by or displaying no or little hesitation; firm or determined in making choices or decisions.

Priming

A psychological effect in which exposure to a stimulus influences a response to a subsequent stimulus, without conscious guidance or intention.