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What happens when bond matures?
10-25-2019, 05:06 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Jun 2010
Posts: 2,140
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What happens when bond matures?
I have a bond purchased years ago. Here is what it says on Vanguard for the description:
XXXXX ELEC LT & PWR REV SER B AMBAC B/E DEF INT @14.694 6.95% 0% 01/01/20 12/06/91
It's obviously a utility company, name redacted. So I'm guessing this means it matures in January, right? So what happens then? Is it just automatically redeemed and instead of a bond I have cash in the account, or do I have to take some sort of action?
Thanks
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And whatever your labors and aspirations in the noisy confusion of life, keep peace in your soul. With all its sham, drudgery, and broken dreams, it is still a beautiful world. Be cheerful. Strive to be happy.- Desiderata by Max Ehrmann
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10-25-2019, 05:18 PM
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#2
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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You’ll get the par value plus the last interest payment deposited into the brokerage where it’s held.
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10-25-2019, 05:29 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,906
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And early next year you might get a 1099 showing, say, $5000 "income" from sale of a bond. If you had paid the same amount ($5000) for that bond, you have no capital gain, but still must report the sale on your tax return along with the $5000 purchase price and $0 cap gain.
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10-25-2019, 06:06 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Jun 2010
Posts: 2,140
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Cap gains? I think they said it was a tax exempt municipal bond. It's been a long, long time ago, but I'm pretty sure. Would that mean I don't have to pay any kind of taxes?
__________________
And whatever your labors and aspirations in the noisy confusion of life, keep peace in your soul. With all its sham, drudgery, and broken dreams, it is still a beautiful world. Be cheerful. Strive to be happy.- Desiderata by Max Ehrmann
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10-25-2019, 06:10 PM
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#5
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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 Quote:
Originally Posted by MissMolly
Cap gains? I think they said it was a tax exempt municipal bond. It's been a long, long time ago, but I'm pretty sure. Would that mean I don't have to pay any kind of taxes?
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Did you buy it at release or on the secondary market? Also it just occurred to me, is this a zero coupon or were you receiving interest payments regularly?
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10-25-2019, 07:35 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Jun 2010
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@COcheesehead - my computer won't let me quote, so I'll answer separately. I have no idea about at release/secondary market.
Yes, it was a zero coupon bond.
__________________
And whatever your labors and aspirations in the noisy confusion of life, keep peace in your soul. With all its sham, drudgery, and broken dreams, it is still a beautiful world. Be cheerful. Strive to be happy.- Desiderata by Max Ehrmann
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10-25-2019, 07:38 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,906
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IIRC, muni bond cag gains are often tax-exempt within the state issued, but subject to federal income tax, as well as taxable if you are in a different state. If you prep your own income tax return you'll need to read up on the rules for your state.
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10-25-2019, 07:43 PM
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#8
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jun 2016
Location: Colorado
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Quote:
Originally Posted by MissMolly
@COcheesehead - my computer won't let me quote, so I'll answer separately. I have no idea about at release/secondary market.
Yes, it was a zero coupon bond.
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That’s little different animal. You buy it at a discount and then you get full par value at maturity. No interest payments.
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10-25-2019, 07:48 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Jun 2010
Posts: 2,140
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I found this: https://www.rbcwm-usa.com/resources/file-703494.pdf so I'm thinking no federal taxes. We also reside in the state of issuance, but I'm not sure about state taxes.
So, in January, I will just see it convert to cash in my account?
__________________
And whatever your labors and aspirations in the noisy confusion of life, keep peace in your soul. With all its sham, drudgery, and broken dreams, it is still a beautiful world. Be cheerful. Strive to be happy.- Desiderata by Max Ehrmann
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10-25-2019, 08:05 PM
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#10
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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Quote:
Originally Posted by MissMolly
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Yes.
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10-25-2019, 08:38 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Jun 2010
Posts: 2,140
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Quote:
Originally Posted by COcheesehead
Yes.
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Thanks
__________________
And whatever your labors and aspirations in the noisy confusion of life, keep peace in your soul. With all its sham, drudgery, and broken dreams, it is still a beautiful world. Be cheerful. Strive to be happy.- Desiderata by Max Ehrmann
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