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Your next coupon payment will be 1/2 the coupon (six months) multiplied by the current value of the TIPS, which in theory can be less than face value, if there has been deflation between issue and the coupon payment date. If, at the maturity date, there has been deflation since issue, the TIPS will be bumped up to its original face value.

Sounds perfect to me -- I hope that statement can make it into the FAQ somewhere.

I'm still betting the IRS has no way of letting you subtract deflation from ongoing taxes on the inflation component.

Exactly where did you place this bet? I'd like to be in on that action, too. ;)

I would like to figure out what the date for the "reference CPI-U" is for newly auctioned TIPS.

Wouldn't it just start with whatever the CPI-U was for the issue date? For example, here's the page you were referring to for the new 10-years just issued:

It shows the "Dated Date" (how snappy is that?) as Jan 15, '06, and the "Ref CPI on Dated Date" as 198.47742. Wouldn't that correspond to the Nov 15, '05 CPI-U value?

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