Question - Karen owns City of Richmond bonds with a face value of $10,000. She purchased the bonds on January 1, 2010, for $11,000. The maturity date is December 31, 2019. The annual interest rate is 8%. What is the amount of taxable interest income that Karen should report for 2010, and the adjusted basis for the bonds at the end of 2010, assuming straight-line amortization is appropriate?
a. $0 and $11,000.
b. $0 and $10,900.
c. $100 and $11,000.
d. $100 and $10,900.
e. None of the above.