Question

Benny purchased $400,000 of Peach Corporation face value bonds for $320,000 on November 13, 2020. The bonds had been issued with $80,000 of original issue discount (OID), because Peach was in financial difficulty in 2020. On December 3, 2021, Benny sold the bonds for $283,000 after amortizing $1,000 of the original issue discount.

What are the nature and amount of Benny's gain or loss?

Benny has a $fill in the blank 1

long-term capital loss
from the sale of the bonds.

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Answer 1

Amount $38000 of long-term capital loss
Step-by-step explanation:
given data
purchased $400,000
face value bonds = $320,000
sold the bonds = $283,000
original issue discount = $1,000
=
solution
we get here amount of Benny's that is express
as
amount of Benny's face value bonds - sold
the bonds + original issue discount .................1
put here value
=
amount of Benny's =$320,000-$283,000 +
$1000
amount of Benny's = $38000
so here amount $38000 of long-term capital