Under the Original Issue Discount (OID)rules as Applied to a Three-Year

question 75

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 purchase.
• B)The OID will not be included in gross income until the end of the third year.
• C)The interest income for the first year will be greater than the interest income for the second year.
• D)The original issue discount must be amortized using the effective interest method.
• E)None of the above is correct.

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