In November of 2016, Mr. Jolly received $100,000 on the redemption of some matur

Question

In November of 2016, Mr. Jolly received $100,000 on the redemption of some matured corporate bonds (stated interest rate of 5%) issued by the Target Corporation. That is, Target paid Mr. Jolly $100,000 and he gave the bonds back to Target.

During 2016 Mr. Jolly received a total of $5,000 in cash interest payments related to the bonds. He had purchased the bonds several years earlier for $94,600.

How much income should Mr. Jolly recognize on his annual tax return for 2016 due to these bonds?

$105,000

$5,000

$5,400

$10,400

$105,000

$5,000

$5,400

$10,400

Explanation / Answer

Answer is $10,400

$5000 will be income from cash interest payments

$5400(100,000-94,600) gain from redemption of bonds

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.