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What is de minimis OID?
What is de minimis OID?
- The amount of money a bondholder receives at maturity.
- The difference between the face value of a debt instrument and the amount actually paid for it when it is issued (correct)
- The total amount of interest earned on a debt instrument.
- The amount of interest that is not subject to taxation.
How is the de minimis amount for OID calculated?
How is the de minimis amount for OID calculated?
- By dividing the stated redemption price at maturity by the number of complete years to maturity.
- By multiplying the face value of a debt instrument by the number of complete years to maturity.
- By multiplying the stated redemption price at maturity by the number of complete years to maturity. (correct)
- By dividing the face value of a debt instrument by the amount that is actually paid for it when it is issued
What happens if the OID on a debt instrument is less than the de minimis amount?
What happens if the OID on a debt instrument is less than the de minimis amount?
- The debt instrument is not subject to taxation. (correct)
- The issuer of the debt instrument must accrue interest on the OID
- The holder of the debt instrument must report income from the OID
- The debt instrument is subject to higher taxes.
What is the de minimis amount for a bond with a stated redemption price of $500 and a maturity of 5 years?
What is the de minimis amount for a bond with a stated redemption price of $500 and a maturity of 5 years?
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Description
"Test Your Knowledge of De Minimis OID: Are You Up to Date on Tax Terminology?" - This quiz will challenge your understanding of de minimis OID, its definition, and its implications for taxation. Put your knowledge to the test and see if you're a tax terminology expert!
