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

question 71

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 maturity by a cash basis taxpayer.
• B)The OID will be included in gross income for the year of purchase.
• C)The interest income will be the same each year.
• D)The interest income will be greater in the third year than in the first year.
• E)None of these is correct.

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Definitions:

Sandwich Generation

Refers to middle-aged individuals who are caught up in the middle between their young adult children, who still may need support, and their elderly parents, who also may need support, both physical and financial.

Young-adult Offspring

Individuals in their late teens to early twenties, considered to be the children or descendants of older parents.

Bereavement Process

The experience of grieving and mourning following the death of a loved one, often involving various emotional, physical, and social responses.

Death Of Pets

The end of life for companion animals, which can lead to mourning and grief for their human caregivers.