In 2017, Mr Yang Paid $160,000 for a Corporate Bond

question 29

Essay

In 2017, Mr Yang paid $160,000 for a corporate bond with a $200,000 stated redemption value. Based on the bond's yield to maturity, amortization of the $40,000 discount was $3,024 in 2017 and $2,960 in 2018. Mr Yang sold the bond for $169,500 in December 2018. What are his tax consequences in each year assuming that:
a. He bought the newly issued bond from the corporation?
b. He bought the bond in the public market through his broker?

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Definitions:

Triglycerides

A type of fat found in the blood, derived from the food we eat, used for energy or stored for future use.

Temperature Homeostasis

The physiological process that regulates the body temperature within a narrow range despite external temperature changes.

Completely Inelastic

A situation in which the demand or supply for a product does not change in response to changes in price.

Inelastic

Refers to a circumstance in which the demand or supply of a product or service is largely unaffected by price fluctuations.