Theresa, a cash basis taxpayer, purchased a bond on July 1, 2013, for $10,000, plus $400 of accrued interest. The bond paid $800 of interest each December 31. On March 31, 2017, she sold the bond for $9,800, which included $200 of accrued interest. a. Theresa has $200 interest income and a $400 loss from the bond in 2017. b. Theresa has $200 interest income and a $200 gain from the bond in 2017. c. Theresa has a $100 loss from the sale of the bond and no interest income. d. Theresa's loss on the sale of the bond is $600. e. None of these.
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