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:

Limiting Factor

An environmental condition that limits the growth, abundance, or distribution of an organism or a population within an ecosystem.

Major Nutrient

Essential chemicals needed in large quantities by living organisms to perform various physiological functions for growth and health.

Biogeochemical Cycles

The natural processes that recycle nutrients and elements between the physical environment and living organisms.

Carbon Dioxide

A colorless, odorless gas produced by burning carbon-containing materials and through respiration, and a significant greenhouse gas.