Reporting maturing bonds on tax forms

woolybully · 02-25-2007, 05:20 PM

TurboTax doesn't say much about this and I couldn't find anything of interest on IRS pub 550 (?).

I had some bonds that matured last year. Both were putchased at a discount. Do I need to report the bond and pay tax on the difference in what I paid and the matured value? I know if I paid a premium for the bonds, I could amortize the premium over the life of the bonds, but I couldn't find anything about what do with bonds bought at a discount. I don't think the IRS would let this loophole get away from them - too obvious.

Thanks,

bpp · 02-25-2007, 05:56 PM

Look at Pub. 550 again, pp. 13-16. I believe that if the discount was Original Issue Discount, then you were supposed to have been declaring part of it every year. If it was market discount, then you can choose to either treat it like OID or else declare all gains when you sell.

02-25-2007, 05:20 PM	#1
woolybully Confused about dryer sheets Join Date: Feb 2007 Posts: 1	Reporting maturing bonds on tax forms TurboTax doesn't say much about this and I couldn't find anything of interest on IRS pub 550 (?). I had some bonds that matured last year. Both were putchased at a discount. Do I need to report the bond and pay tax on the difference in what I paid and the matured value? I know if I paid a premium for the bonds, I could amortize the premium over the life of the bonds, but I couldn't find anything about what do with bonds bought at a discount. I don't think the IRS would let this loophole get away from them - too obvious. Thanks,

02-25-2007, 05:56 PM	#2
bpp Full time employment: Posting here. Join Date: Mar 2005 Posts: 699	Re: Reporting maturing bonds on tax forms Look at Pub. 550 again, pp. 13-16. I believe that if the discount was Original Issue Discount, then you were supposed to have been declaring part of it every year. If it was market discount, then you can choose to either treat it like OID or else declare all gains when you sell.

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