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.

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Definitions:

Mixed-motive

Refers to situations or games in which participants have both shared and conflicting interests with each other.

Free Riding

The behavior of individuals who benefit from resources, goods, or services without contributing to the cost or effort involved in providing them.

Test Bank

A collection of test questions, typically including multiple-choice, true/false, and essay questions, used for academic assessments.

Promotive

Pertaining to actions or policies that actively encourage or facilitate the improvement or advancement of something.