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NEW QUESTION: 1

A. Option A
B. Option B
C. Option E
D. Option C
E. Option D
Answer: A,D

NEW QUESTION: 2
Which one of the following statements is correct with regard to an individual taxpayer who has elected to amortize the premium on a bond that yields taxable interest?
A. The amortization is treated as an itemized deduction.
B. The amortization is not treated as a reduction of taxable income.
C. The bond's basis is increased by the amortization.
D. The bond's basis is reduced by the amortization.
Answer: D
Explanation:
Explanation
Choice "c" is correct. The bond's basis is reduced by the amortization of the premium.
Choice "a" is incorrect. For bonds acquired after 12/31/87, the amortization of the premium is an offset to interest income on the bond rather than a separate interest deduction.
Choice "b" is incorrect. The amortization of the premium will reduce taxable income.
Choice "d" is incorrect. The bond's basis will be decreased by the amortization.