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Posted by Paul on February 19, 2007, 2:01 pm
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>> I bought taxable corporate bonds that each have a premium
>> and accrued interest. If I choose not to amortize the
>> premiums, would I include that amount in the cost basis and
>> report the sale as a capital loss on Schedule D? And since
>> accrued interest is to be deducted from total interest
>> income on Schedule B, would I do that in the year the bond
>> is bought or when it matures?
> you need to amortize the premium to the 1st call date
Why would the premium have to be amortized? Isn't
amortization simply an option I can elect that would allow
me to reduce my taxes each year until the bond matures? Why
can't I decline to amortize and thus pay more taxes each
year and then when the bond matures I add the premium to the
cost basis and take a capital loss? Where can I find the
regulation that requires me to amortize the premium?
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