Zero-coupon municipal bonds: Zero-coupon bonds, either taxable or tax-exempt, pay interest at maturity rather than at regular intervals throughout the life of the bond. Generally, zeros are sold at a discount to their face value, with the promise of returning full face value to the investor at maturity. Here is the difference between taxable and tax-exempt zeros: Taxable zero-coupon bonds accrue interest each year and holders must pay tax on it, even though they do not receive the interest until the bond is sold or matures. For tax-exempt issues, there is no federal income tax on the accrued interest.
Isn't this a situation where all the interest is added to basis whether taxable or non taxable. When you get the 1099 it is for the full amount tendered.
Isn't this a situation where all the interest is added to basis whether taxable or non taxable. When you get the 1099 it is for the full amount tendered.
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