Karen Owns City of Richmond Bonds with a Face Value

question 109

Multiple Choice

Karen owns City of Richmond bonds with a face value of $10,000.She purchased the bonds on January 1,2016,for $11,000.The maturity date is December 31,2025.The annual interest rate is 8%.What is the amount of taxable interest income that Karen should report for 2016,and the adjusted basis for the bonds at the end of 2016,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
• E)None of the above

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