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You are right. Only the interest on delayed payment is taxable to you. As for where to put it, how much you have is pertinent. Up to about $25,000 look at Vanguard high-yield municipals VWALX. Currently paying about 4% tax free. You can get over 5% on individual Municipal Bonds, but you must purchase at least $5,000 and preferrably $25,000 of each issue. If you have *some* risk tolerance, look at stock TEG or fund HIX. for better than average dividend yield. Yes, there's risk, but minimal.

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