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Financial Planning / Tax Strategies
|Subject: Municipal Bonds||Date: 5/29/2012 12:01 PM|
|Author: vkg||Number: 116190 of 121181|
I am attempting to understand municipal bonds. It has been a couple of years, I thought I understood what my father's tax preparer told me. Either I didn't, or I have forgotten.
1.) Are fees for the purchase of a tax-exempt bond deductible?
They weren't deducted. At the time, I was unable to find the documentation for the fees. I believe that I was told that it didn't matter because the fees are not deductible.
2.) If a premium paid for a secondary market tax exempt bond, it is amortized over the remaining term of the bond. If a bond is called before maturity, is remaining value of the premium a deductible loss?
3.) The cost basis for an inherited bond is greater than face value. The bond was called, and paid at face value. Does the cost basis over face value need to be amortized, the same as if a premium was paid for the bond? The bond was called in 2012, less than a year after it was inherited.
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