Theresa,a cash basis taxpayer,purchased a bond on July 1,2011,for $10,000,plus $400 of accrued interest.The bond paid $800 of interest each December 31.On March 31,2015,she sold the bond for $9,800,which included $200 of accrued interest.

Question

Quizplus · Accepted Answer

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 ($10,000) and the sale price excluding accrued interest ($9,800 - $200 = $9,600).

Theresa,a Cash Basis Taxpayer,purchased a Bond on July 1,2011,for $10,000,plus