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On January 1, 2017, Kunto, a cash basis taxpayer, pays $46,228 for a 24-month certificate. The certificate is priced to yield 4% (the effective interest rate) with interest compounded annually. No interest is paid until maturity, when Kunto receives $50,000. In your computations, round any amounts to the nearest dollar. Kunto has income for 2017 and for 2018.
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