On January 1, 2020, Desay Inc. issues 5 year bonds payable with a maturity value of $900,000. They have a coupon rate of 12 percent, pay interest on January 1 of each year, and are sold for $1,200,000. The Company has a December 31 year end. Determine the current year tax consequences under each of the following assumptions:
• Desay is in the business of lending money.
• Desay is not in the business of lending money and the CRA does not believe that they made a deliberate effort to create a premium on the issuance of the bonds.
• Desay is not in the business of lending money and the CRA believes that they made a deliberate effort to create a premium on the issuance of the bonds.

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The Answer of On January 1, 2020, Desay Inc. issues 5 year bonds payable with a maturity value of $900,000. They have a coupon rate of 12 percent, pay interest on January 1 of each year, and are sold for $1,200,000. The Company has a December 31 year end. Determine the current year tax consequences under each of the following assumptions:
• Desay is in the business of lending money.
• Desay is not in the business of lending money and the CRA does not believe that they made a deliberate effort to create a premium on the issuance of the bonds.
• Desay is not in the business of lending money and the CRA believes that they made a deliberate effort to create a premium on the issuance of the bonds.