Theresa,a cash basis taxpayer,purchased a bond on July 1,2009,for $10,000,plus $400 of accrued interest.The bond paid $800 of interest each December 31.On March 31,2013,she sold the bond for $9,800,which included $200 of accrued interest.

Question

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Theresa has $200 interest income from the accrued interest included in the sale price and a $400 loss from the bond, calculated as the difference between the purchase price excluding accrued interest ($10,000) and the sale price excluding accrued interest ($9,600).

Theresa,a Cash Basis Taxpayer,purchased a Bond on July 1,2009,for $10,000,plus