Do Bonds Bought at a Premium Produce Capital Losses?
Since a bond bought at a discount generates a capital gains tax liability at maturity, does it generate a capital loss deduction at maturity if bought above par?
-- Kenneth Sarno
That depends on whether the bond is taxable or tax-exempt.Before we get into that, let's review some terminology for readers less well-versed in it. Bonds have a face value, typically some multiple of $1000, which is the amount you get when the bond matures. Bonds are quoted as a percentage of face value. A bond with a face value of $1000 whose price is 98 costs $980, plus any
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