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    Capital gain from bond purchasing

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    Rica purchased for $4,500 a $5,000 bond when it was issued two years ago. Rica amortized $250 of the original issue discount and then sold the bond for $4,875. Which of the following statements is correct?

    a. Rica has $125 of long-term capital gain.

    b. Rica has $250 of long-term capital gain.

    c. Rica has $375 of long-term capital gain.

    d. Rica has $125 long-term capital loss.

    e. None of the above.

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    Answer: C

    A capital gain is the difference between what you ...

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