In January 2016, Conan, a cash basis taxpayer, purchases for $4,000 a Series EE savings bond with

Question:

In January 2016, Conan, a cash basis taxpayer, purchases for $4,000 a Series EE savings bond with a maturity value of $4,800 (a 6% annual yield). At the same time, he also purchases for $5,000 a 3-year bank certificate of deposit with a maturity value of $6,650 (a 10% annual yield). Both securities mature in 2018. Must Conan recognize any income in 2016? How much income must Conan recognize in 2018?

Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...