Cash basis individuals must accrue market discount on a bond as annual interest income over the life of the bond.

Name: Cash basis individuals must accrue market discount on a bond as annual interest income over the life of the bond.
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Cash basis individuals generally recognize income when it is actually or constructively received, not by accruing it over time as in the accrual method. Market discount on a bond is typically taxed when the bond is sold or matures, not accrued annually.

Cash Basis Individuals Must Accrue Market Discount on a Bond