Jorge purchased a newly issued $20,000 corporate bond for $19,500 on November 1, 2019

Taxation Dec 17, 2020

Jorge purchased a newly issued $20,000 corporate bond for $19,500 on November 1, 2019.  The maturity date of the bond is October 31, 2024 and the annual interest rate is 5%, paid on October 31 of each year.  How much interest income should Jorge report on his 2019 and 2020 tax returns if he wants to minimize the interest recognized for tax purposes?





		
$167 in 2019 and $1,000 in 2020.

		
$0 in 2019 and $975 in 2020.





		
$0 in 2019 and $1,000 in 2020.





		
$167 in 2019 and $833 in 2020.

Expert Solution

O in 2019 and 1000 in 2020

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