Municipal Bond Forum
Premium must be amortized
Q
I read somewhere that no loss is allowed when premium bonds mature. Is it because you’d be expected to earn more interest?
A
James A. Klotz responds:
The premium must be amortized. There is no capital loss at maturity. There may be a gain or loss if the bonds are sold prior to maturity above or below the amortized, adjusted cost.
Please consult your tax professional to clarify your specific situation.
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