State Government & US Possession Bonds Capital Gain

[TAXNJ]

Does anyone know where in the Tax Book the area of "how to treat the Capital Gain treatment of State Government & US Possession Bonds Capital Gain for federal individual income tax ? Would it be taxable or exempt?

My guess is that the gains are taxable

I know that the interest on the federal level is exempt.

Thank you in advance

[Brad Imsdahl]

TTB, page 6-8 under Capital assets says, "most property a taxpayer owns and uses for personal or investment purposes is a capital asset. For example, a house, furniture, car, stocks, and bonds are capital assets."

It then goes on to list noncapital assets. If a specific item is not listed under the noncapital assets, it is a capital asset. All capital assets that are sold at a gain are subject to tax as a capital gain. Since tax-exempt bonds are not listed under the noncapital asset category, you should assume they are capital assets subject to capital gain taxation.

[TAXNJ]

Thanks for the direction

Brad,

Thank you - I thought it would be taxable on the federal level

- However on a state level in NJ even the gain is a non-taxable event (if it meets the requirements)