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Depending on how large a bond we're talking about, I would certainly be tempted to just report it with the basis matching the return of capital (so no gain or loss). For a small enough bond, there is no functional difference. I would certainly do it for a $5000 bond, and I certainly would NOT take the shortcut on $1 million of original bond. Somewhere in between is a switchover point.

I should also mention that this shortcut is definitely NOT an option with a zero coupon bond. Zeros are the whole reason all of these discount/premium amortization rules came in to being.

--Peter
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