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Uncle owns a bond with a face value of $1,000 and which bears an interest...

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Accounting

Uncle owns a bond with a face value of $1,000 and which bears an interest rate of 10%. Interest of $50 is paid twice a year on May 1 and November 1. On December 25, 20X1, Uncle gave the bond to his nephew, Nephew. At the time of the transfer there was $15 accrued interest on the bond (54/365 x 1,000 x 10%). On May 1, 20X2 Nephew received the full $50 of interest accruing between November 1, 20X1 and April 30, 20X2. Who is taxed on the $50 paid to Nephew on May 1, 20X2

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