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Posted by Arthur Kamlet on December 31, 2006, 11:50 pm
Please log in for more thread options >> On December 15th, I buy a bond which will pay $425 interest
>> on February first. I pay $10500 for the bond and $322
>> accrued interest. How is the $322 handled this year? How
>> is the $425 handled next year?
>>
>> If they had occured in the same year, do I simply report the
>> $103 in interest. Don't mention the or is it more compled?
> No, that's how it works. Ignore the $322 for now.. Next
> year declare the $425 and deduct the $322 as "nominee
> interest" on Schedule B. So, you'll pay tax on $103 next
> year. Do not include the $322 in your basis when you
> sell, nor the accrued interest in your sales proceeds you
> will get when you sell when computing your capital gain or
> loss. pay income tax on the accrued interest in the year you
> sell the bond.
I agree with all above except I'd label the $322 "Accrued
Interest" on schedule B.
Nominee interest is where you act as Nominee for another
known party and Nominee Interest over $600 to that party,
not your spouse, requires that you issue a 1099-INT.
With accrued interest you cannot issue a 1099-INT to the
party, and wouldn't want to mess with that anyway.
__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
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