Taxation of Called Muni Bond

Home Fairmark Forum Taxation of Investments Taxation of Called Muni Bond

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  • #2365
    kaneohe
    Participant

    Muni bond was purchased at initial offering at discount . Some yrs
    later bond was called at face value. I think I know that if the bond matures, there is no gain. What about when bond is called?

    #2368
    ruth
    Participant

    See pages 5 and 6 of IRS Publication 1212 to determine whether there is any OID. If there is, see page 12 of Pub. 1212 figure the accrued OID and add it to the basis of the bond. Gain on the redemption is the difference between the call price and the basis.

    #2372
    kaneohe
    Participant

    Thanks, Ruth…….I guess there’s nothing different about maturity, or call,or sale of the muni? Just that at maturity, the OID has run down to zero?

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