Milton Owns a Bond (Face Value of $25,000) for Which

question 123

Multiple Choice

Milton owns a bond (face value of $25,000) for which he paid $28,000. Which of the following statements is correct?

• A) If the bond is taxable, Milton must amortize the $3,000 premium over its remaining life.
• B) The adjusted basis of the taxable bond remains at $28,000, as the amortized amount is deducted as interest.
• C) If the bond is tax-exempt, Milton can elect to amortize the $3,000 premium over the remaining life of the bond.
• D) The adjusted basis of the tax-exempt bond remains at $28,000, as the amortized amount cannot be deducted as interest.
• E) None of the above is correct.

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Definitions:

IT Company

A business enterprise that specializes in delivering technology-related services and solutions, including software development, IT consultancy, and hardware installation.

Regular Basis

Occurring frequently or at evenly spaced intervals over time.

Earnings

The profit or income generated from work, investments, or business operations after deducting expenses.

Mixed Message

A communication that is conflicting or inconsistent, often leading to confusion or misunderstanding.