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Bonds/zero coupon muni bond

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Expert: Doug Ingram - 4/2/2004


Question
A muni zero coupon bond for the Cleveland airport expansion came due last year and I received a 1099B form for $15000. Of course I bought the bond at a lower price, but since this is a muni type bond, what do I need to claim for income tax purposes ... do i just fill in Form D with the sale minus purchase price or is any gain really tax free?

Answer
Most Munis are tax free and your gain should be non-taxable.
However, it depends on the bond and is a question for your accountant!
(Not all munis are tax-free and on some the coupon is tax -free, but any discount accretion might not be!  That's why an accountant should look at it.)

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Doug Ingram

Expertise

Fixed income portfolio allocation and strategies for institutional investors. Having designed multi-scenario risk quantification and cash flow projection models for nearly 25 years, Strategic Technical Initiatives can answer your regulatory, SFAS 115 allocation, securities selection, and other questions dealing with yield curve placement and portfolio mix strategies. I write the Bond Market Review on behalf of Commerce Street Capital Management.

Experience

Trading and designing portfolio strategies since 1980.

Education/Credentials
Physics and Differential Mathematics

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