Karen Owns City of Richmond Bonds with a Face Value

Multiple Choice

Karen owns City of Richmond bonds with a face value of $10,000.She purchased the bonds on January 1, 2019, for $11,000.The maturity date is December 31, 2028.The annual interest rate is 4%.What is the amount of taxable interest income that Karen should report for 2019, and the adjusted basis for the bonds at the end of 2019, 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