Milton Owns a Bond (Face Value of $25,000) for Which

Multiple Choice

Milton owns a bond (face value of $25,000) for which he paid $28,000. Which of the following statements is correct?

A) If the bond is taxable, Milton must amortize the $3,000 premium over its remaining life.
B) The adjusted basis of the taxable bond remains at $28,000, as the amortized amount is deducted as interest.
C) If the bond is tax-exempt, Milton can elect to amortize the $3,000 premium over the remaining life of the bond.
D) The adjusted basis of the tax-exempt bond remains at $28,000, as the amortized amount cannot be deducted as interest.
E) None of the above is correct.