Karen Owns City of Richmond Bonds with a Face Value

question 95

Multiple Choice

Karen owns City of Richmond bonds with a face value of $10,000.She purchased the bonds on January 1, 2019, for $11,000.The maturity date is December 31, 2028.The annual interest rate is 4%.What is the amount of taxable interest income that Karen should report for 2019, and the adjusted basis for the bonds at the end of 2019, assuming straight-line amortization is appropriate?

• A)$0 and $11,000
• B)$0 and $10,900
• C)$100 and $11,000
• D)$100 and $10,900

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