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two years ago, mr. young paid $40,000 to buy a publicly traded corporate bond through his broker. the bond's stated redemption value was $45,000. this year, mr. young sold the bond for $47,100. compute and characterize his gain or loss on sale. multiple choice $7,100 ordinary income. $7,100 long-term capital gain. $2,100 long-term capital gain. $5,000 ordinary income and $2,100 long-term capital gain.

Respuesta :

The correct answer is option 4: $5,000 ordinary income and $2,100 long-term capital gain.

Mr. Young's gain on the sale of the bond is $7,100. However, since he held the bond for more than one year, the gain is classified as a long-term capital gain. Since the bond was purchased two years ago, the gain is split between $5,000 of ordinary income and $2,100 of long-term capital gains.

The gain or loss resulting from the sale of an eligible investment that was held for more than a year at the time of sale is referred to as a long-term capital gain or loss. In contrast, investments that are sold off in less than a year may see short-term gains or losses.

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