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Subject Author Date
T-Bill purchases at less than face value NadCixelsyd 02-14-2007
Posted by NadCixelsyd on February 14, 2007, 10:21 pm
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 On May 30th, I purhcased a 6-month zero-interest T-bill for
$9760.00 from the treasury. On November 30th, I redeemed it
for $10000. How do I book it? When do I book it?

If I treat it as a short-term capital gain, the net effect
is the same on my US taxes, but I don't want to pay state
income taxes on the $240 gain.

Do I book $9760 as the sale price and also $240 interest on
November 30th? Do I book the purchase price as $10000 with
$240 in interest on May 30th?

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Posted by Rich Carreiro on February 15, 2007, 1:17 am
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> On May 30th, I purhcased a 6-month zero-interest T-bill for
> $9760.00 from the treasury. On November 30th, I redeemed it
> for $10000. How do I book it? When do I book it?

As interest. On 30 Nov 2006. The broker should give you
a 1099-INT showing $240 in US obligations interest.

> If I treat it as a short-term capital gain,

You don't.

> Do I book $9760 as the sale price and also $240 interest on
> November 30th? Do I book the purchase price as $10000 with
> $240 in interest on May 30th?

Most brokers don't report T-bill redemptions at maturity. If
the broker doesn't report the redemption, you report nothing
on Sched D (though of course the interest gets reported on
Sched B). If the broker does report it, then you report it
on Sched D with basis and proceeds both $10,000 and zero
gain or loss.

--
Rich Carreiro rlcarr@animato.arlington.ma.us

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by A.G. Kalman on February 15, 2007, 1:26 am
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NadCixelsyd wrote:

> On May 30th, I purhcased a 6-month zero-interest T-bill for
> $9760.00 from the treasury. On November 30th, I redeemed it
> for $10000. How do I book it? When do I book it?
>
> If I treat it as a short-term capital gain, the net effect
> is the same on my US taxes, but I don't want to pay state
> income taxes on the $240 gain.
>
> Do I book $9760 as the sale price and also $240 interest on
> November 30th? Do I book the purchase price as $10000 with
> $240 in interest on May 30th?

The $240 is interest income, not capital gain. As such, it
is taxable by the feds and not taxable by any state of the
union. Your cost basis is what you paid for the bond plus
the interest income you report.

--
Alan
http://taxtopics.net

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by PeterL on February 15, 2007, 1:27 am
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> On May 30th, I purhcased a 6-month zero-interest T-bill for
> $9760.00 from the treasury. On November 30th, I redeemed it
> for $10000. How do I book it? When do I book it?

$240 as interest on the 2006 tax return. (You are talking about
last year right?)

> If I treat it as a short-term capital gain, the net effect
> is the same on my US taxes, but I don't want to pay state
> income taxes on the $240 gain.

Excluded from state taxes.

> Do I book $9760 as the sale price and also $240 interest on
> November 30th? Do I book the purchase price as $10000 with
> $240 in interest on May 30th?

No need to enter a date for the interest.

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Benjamin Yazersky CPA on February 17, 2007, 5:36 am
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> On May 30th, I purhcased a 6-month zero-interest T-bill for
> $9760.00 from the treasury. On November 30th, I redeemed it
> for $10000. How do I book it? When do I book it?
>
> If I treat it as a short-term capital gain, the net effect
> is the same on my US taxes, but I don't want to pay state
> income taxes on the $240 gain.
>
> Do I book $9760 as the sale price and also $240 interest on
> November 30th? Do I book the purchase price as $10000 with
> $240 in interest on May 30th?

it is interest income from US Treas

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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