Ralph purchased his first Series EE bond during the year. He paid $709 for a 10-year bond with a $1,000 maturity value. The yield to maturity on the bonds was 3.5%. Ralph is not required to recognize the $291 ($1,000 - $709) original issue discount until the bond matures. However, Ralph can elect to amortize the discount over the ten-year period.

Question

Quizplus · Accepted Answer

Ralph can elect to amortize the discount over the ten-year period if he chooses to do so, even though he is not required to recognize it until maturity.

Ralph Purchased His First Series EE Bond During the Year