Municipal Bonds

[mountaintosea]

Hi all, I have some really dumb questions about these bonds.

1. If a bond is called does the statement from the broker say the bond was called or does it say sale?

2. Is it possible that the brokers statement can reflect a loss but not really be a loss?

3. Can the cost basis show that it is more than the amount sold but not really be a loss?

The reason I'm asking these questions is apparently one of my older brothers called me quite alarmed when he looked at my parent's brokerage statement. This guy is an independent broker. When my brother asked my dad about the statement the above where the explanations. No he did not authorize the sale of 3 bonds. They were probably called and even though it looks like a loss it's not My brother called me because I buy and sell stocks occasionally only never bonds. He's concerned this broker might be taking advantage of my 90 year old dad and is concerned it might continue. How is a loss not a loss?

 

[MichaelB]

Hi all, I have some really dumb questions about these bonds.

1. If a bond is called does the statement from the broker say the bond was called or does it say sale?

2. Is it possible that the brokers statement can reflect a loss but not really be a loss?

3. Can the cost basis show that it is more than the amount sold but not really be a loss?

The reason I'm asking these questions is apparently one of my older brothers called me quite alarmed when he looked at my parent's brokerage statement. This guy is an independent broker. When my brother asked my dad about the statement the above where the explanations. No he did not authorize the sale of 3 bonds. They were probably called and even though it looks like a loss it's not My brother called me because I buy and sell stocks occasionally only never bonds. He's concerned this broker might be taking advantage of my 90 year old dad and is concerned it might continue. How is a loss not a loss?

The bonds I have held that were called had notices that said called or redeemed. Never "sale or sold". If there is a brokerage statement that says sale they were probably sold.

Loss or gain depends on their purchase price, regardless of whether they were redeemed or sold. If the bond was taxable and purchased at a discount, part of that would have been amortized, charged as interest and added to the cost basis. If the bond was purchased at a premium, the amortization would have been credited to interest and reduce the cost basis.In either case the adjustment would probably not be made by the broker.

 

[mountaintosea]

Thanks MichaelB. I called Schwab and they said sounds like sold also. No authorization? Who knows, my Dad's memory is not the best. Bottom line my brother needs to meet with this broker. He needs to ask about the details.

 

[MichaelB]

Thanks MichaelB. I called Schwab and they said sounds like sold also. No authorization? Who knows, my Dad's memory is not the best. Bottom line my brother needs to meet with this broker. He needs to ask about the details.

Brokers use recorded lines just to make sure. If you suspect something write a letter to the broker now so they can consult the tape.

 

[mountaintosea]

Thanks!