On September 1, Year 1, Sam purchased for $9,200 cash a $10,000 bond with 10%...
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Accounting
On September 1, Year 1, Sam purchased for $9,200 cash a $10,000 bond with 10% annual interest that matures in Year 11. Sam did not elect to accrue market discount currently as interest income. On September 2, Year 2, Sam sold the bond for $9,400. The amount and character of gain Sam must recognize in Year 2 from this transaction is
$80 ordinary income; $120 short-term capital gain.
$200 short-term capital gain.
$600 long-term capital loss.
$80 ordinary income; $120 long-term capital gain.
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