Duncan purchased State of Wisconsin general-purpose bonds at a cost of $3,400 in 2014.He receives $170 interest on the bonds in 2014,2015,and 2016.In 2016,he sells the bonds for $3,800.Duncan excludes the bond interest,but must include a $400 capital gain in his 2016 gross income.Which of the following Concepts,Constructs,and/or Doctrines help in forming the basis for this treatment?
I.Capital Recovery Concept.
II.Legislative Grace Concept.

Question

Duncan purchased State of Wisconsin general-purpose bonds at a cost of $3,400 in 2014.He receives $170 interest on the bonds in 2014,2015,and 2016.In 2016,he sells the bonds for $3,800.Duncan excludes the bond interest,but must include a $400 capital gain in his 2016 gross income.Which of the following Concepts,Constructs,and/or Doctrines help in forming the basis for this treatment?
I.Capital Recovery Concept.
II.Legislative Grace Concept.
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Quizplus · Accepted Answer

The Capital Recovery Concept allows Duncan to recover his initial investment of $3,400, and the Legislative Grace Concept allows for the exclusion of certain types of interest from taxable income.

Duncan Purchased State of Wisconsin General-Purpose Bonds at a Cost