On January 1, 2016, Kunto, a cash basis taxpayer, pays $46,228 for a 24- month certificate. The

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On January 1, 2016, Kunto, a cash basis taxpayer, pays $46,228 for a 24- month certificate. The certificate is priced to yield 4% (the effective interest rate) with interest compounded annually. No interest is paid until maturity, when Kunto receives $50,000. In your computations:
a. Compute Kunto's gross income from the certificate for 2016.
b. Compute Kunto's gross income from the certificate for 2017.
Round any amounts to the nearest dollar.
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South Western Federal Taxation 2017 Comprehensive

ISBN: 9781305874169

40th Edition

Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young

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