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tamaranim1 [39]
3 years ago
14

For bonds issued 2019, the taxpayer must amortize bond premium using which of the following methods?

Business
1 answer:
MArishka [77]3 years ago
4 0

Answer:

For bonds issued 2019, the taxpayer must amortize bond premium using  the following method:

a. Straight-Line Method.

Explanation:

The premium paid by the taxpayer for a bond represents part of the cost basis of the bond.  The bond premium can be tax-deductible at a rate spread out (amortized) over the bond's lifespan.  The straight-line method for bond premium amortization is considered to be a simpler method than the effective interest amortization method.  While the straight-line amortization divides the bond's total premium over the remaining payment periods, the effective interest, which is more complicated, computes some unique values at all points during the amortization process.

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