Municipal Bond Forum
Home > Municipal Bond Forum > Taxes >
Taxes and zeros
Q
I’ve been reading up on zeros and taxes and such and have a question: With tax-exempt municipal zeros, are taxes due annually as zeros accrete, even though they are tax exempt? There seems to be some differing opinions about this.
A
James A. Klotz responds:
For the “phantom income” produced by taxable zero coupon bonds, taxes are due annually. Zero coupon munis, on the other hand, accrete free from federal taxation.
Start here.
Do you have specific criteria for bonds you’re looking for? Let us know and we’ll e-mail you bonds that fit your needs. There is no charge for this service.
This report is produced solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. This report is based on information obtained from sources believed to be reliable but no independent verification has been made, nor is its accuracy or completeness guaranteed.