Sophie purchased $100,000 of Stoudemire Corporation face value bonds for $86,000 on November 19, 2019. The bonds had been issued with $14,000 of original issue discount (OID), because Stoudemire was in financial difficulty in 2019. On November 30, 2020, Sophie sold the bonds for $87,000 after amortizing $1,200 of the original issue discount. What are the nature and amount of Sophie's gain or loss? Sophie has 2,200 x of ordinary income x from the sale of the bonds.
Sophie purchased $100,000 of Stoudemire Corporation face value bonds for $86,000 on November 19, 2019. The bonds had been issued with $14,000 of original issue discount (OID), because Stoudemire was in financial difficulty in 2019. On November 30, 2020, Sophie sold the bonds for $87,000 after amortizing $1,200 of the original issue discount. What are the nature and amount of Sophie's gain or loss? Sophie has 2,200 x of ordinary income x from the sale of the bonds.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter8: Property Transactions: Capital Gains And Losses, Section 1231 And Recapture Provisions
Section: Chapter Questions
Problem 19P
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Transcribed Image Text:Problem 14-46 (b) (LO. 2, 3)
Sophie purchased $100,000 of Stoudemire Corporation face value bonds for $86,000 on
November 19, 2019. The bonds had been issued with $14,000 of original issue discount
(OID), because Stoudemire was in financial difficulty in 2019. On November 30, 202o,
Sophie sold the bonds for $87,000 after amortizing $1,200 of the original issue discount.
What are the nature and amount of Sophie's gain or loss?
2,200 x of ordinary income x from the sale of the bonds.
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Original issue discount arises when the issue price of a debt obligation is less than the maturity
value of the obligation.
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