UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next
Author: TMFGalagan Big gold star, 5000 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35400  
Subject: Re: Taxes of Discounted Bonds Date: 12/14/2006 10:15 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
I realized there was something missing on taxes on the difference between purchase price and face value for bonds purchased at a discount. As best I understand (Chris, Dan, correct me if I'm wrong), this is treated as income, taxed at your marginal rate, not as a capital gain, although how it gets reported is complicated.

Sounds right to me.

You'll want to be careful to distinguish the OID rules, which only refer to bonds where the initial offering price is at a discount, with the different rules that apply when you buy a bond on the secondary market at a discount or premium.

According to this:

http://www.investinginbonds.com/learnmore.asp?catid=8&subcatid=60

OID on a muni is tax-exempt, but if you buy a muni at a discount in the secondary market, some of the gain becomes ordinary income.

dan
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next

Announcements

Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement