Jake owns City of Charleston bonds with an adjusted basis of $100,000. During the year, he receives interest payments of $4,000. Jake partially financed the purchase of the bonds by borrowing $70,000 at 6% interest. Jake's interest payments on the loan this year are $4,100, and his principal payments are $1,000.
a. Should Jake report any interest income this year?
b. Can Jake deduct any interest expense this year?

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