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You do report tax exempt interest on Schedule B.
But this was a buy and sell, transaction on Schedule D. Schedule B is by source, usually as in brokerage, while Schedule D is a list of all the individual buy and sell transactions. I'm not a tax pro, just someone who does their own for 30+ years, but I'd report according to the form received. On
a zero coupon muni the difference between buy and sell isn't taxable federally; might be for state, and might be for AMT. You do not pay imputed gain annually on
a zero coupon muni, as you would on a corporate zero,
so in that respect it is acting like interest. If I
don't have it quite right one of the tax pros will be along shortly! Regards, Chris
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