02-17-2020 09:00 AM. For single bonds or accounts containing a single bond, enter the CUSIP number of the tax-exempt bond for which tax-exempt interest is reported in box 8 or tax credit bond (including build. Below this subtotal, print “ABP Adjustment,” and the total interest you received. Do not file. B&D Interest Income State ID No. The premium paid for a bond represents part of the cost basis of the bond, and so can be tax-deductible, at a rate spread out (amortized) over the bond’s lifespan. Tax-exempt interest $ 9 . Form field Folder > Screen Field Statement column; Payer's Name: Income > B&D: Interest Income: Description: Recipient's TIN: Income > B&D: Interest Income: T S J: Box 1 - Interes Because bond premium amortization is mandatory for tax-exempt Bonds, a Bond holder who has acquired a tax-exempt Bond with bond premium must amortize the premium over the term of the Bond, reducing the basis in the Bond by such amortization. How to enter an election to amortize bond premium. Under Wages & Income select I nterest on 1099-INT. Tax-Exempt Interest Received by Estate or Trust. Maintains a dollar-weighted average maturity of 1 to 2 years. 03-31-2023, 08:59 AM. Effectively, that means the yield on a municipal bond paying 3. 171–2, if a bond premium election were in effect for the prior taxable years, C would have amortized $3,257. I net purchased accrued interest (purchased interest) and box 13 on 1099 INT (Bond Premium on TEB) against total Tax Exempt Interest (Box 8 on 1099 INT). See Publication 1212 if this applies for instructions on how to calculate the taxable portion. 70 years. Client has CA muni bond with tax exempt interest but also a bond premium reported in box 13. (However, see Tax-Exempt Bonds and Coupons, later. ) The federal tax laws allow DED to allocate an annual amount established by formula in tax-exempt bond authority for industrial development, first-time farmers, student. L. Go to Interest and Dividend Income. Specified Private Activity Bond Interest — Shows tax-exempt interest subject to the alternative minimum tax. (yield to worst for callable bonds. If boxes 8 and 11 are blank. Where do I enter bond premium non treasury obligations noncovered. A California bond is federal tax-free, so on his federal return, the taxpayer reports $40 in tax-free interest ($50 minus $10 in amortizable premium) and reduces his basis in the bond from $1,100 to $1,090 in the first year. Select visit all on the line Forms 1099-INT, 1099-DIV, 1099-OID. When the bond matures, the bondholder will. Specified Private Activity Bond Interest — Shows tax-exempt interest subject to the alternative minimum tax. These are all from municipal bonds which are tax-free. SEC Yield: 4%. • Qualified hospital bonds. 171–1, the amount of bond premium is $10,000 ($110,000−$100,000). When the bond matures, the. Under § 1. Tax-Exempt Private Activity Bonds Qualified private activity bonds are tax-exempt bonds issued by a state or local government, the proceeds of which are used for a defined qualified purpose by an entity other than the government issuing the bonds (the “conduit borrower”). . Include in box 8 any accrued qualified stated interest on these bonds sold between interest dates (or on a payment date). 09%. That means: RISE's gains are taxed differently. What should I do with this?A muni bond was also sold, 1099-B reports same amount as cost basis $10,000 and sales price of $10,000. CT modifies federal AGI by adding tax exempt interest to federal AGI. Yes, we have an entry in Box 10 and Box 11. tax-exempt bonds and, if a tax-exempt OID bond purchased at the issue price in the initial offering is held to maturity, any OID associated with the bond would be treated as tax-exempt interest. His amortizable premium is $10 per year. State identification no. 1, Schedule M-1) and should be sourced to the appropriate State. That is the amortized premium paid above and beyond interest payable on covered securities and is used to offset interest received. Solved: will negative interest income due to accrued. When To File File Form 8038 by the 15th day of the 2nd calendar month after the close of the calendar quarter in which the bond was issued. read moreor qualified private activity bonds, such as qualified 501(c)(3) bonds. Higher coupons deliver more of the return sooner. If that option is not exercised by the issuer, taxable loan stays in place and is subject to a make-whole call – If issuer opts to issue tax exempt bonds, lender can accept or reject – If lender rejects the tax exempt bond option, it will instead pay aThe following includes answers to common questions about interest, dividends, and tax-exempt income. If your combined income is less than $34,000 for individuals and $44,000 for couples filing jointly, up to 50%. When taken in total, the reporting from the two brokerage firms correctly shows the tax exempt interest and the tax exempt bond premium amounts. Tax Reform Act of 1986 The TRA 1986 greatly reduced private activities that may be financed with tax-exempt bond proceeds. Is the line 8 amount already "adjusted" for the line 13 amount, or is the interest I sh. In the case of a bond (other than a bond the interest on which is excludable from gross income), the amount of the amortizable bond premium for the taxable year shall be allowed as a deduction. Fields highlighted in yellow import into the UltraTax CS Source Data Entry application. o It is also possible that a bond that was issued with OID is later bought at a premium. Yes, you can enter Tax-exempt interest and Specified private activity bond in form 1099- Div. 2014—Subsec. State tax withheld $ $ 2021. Subtract the bond premium amortization from your interest income from these bonds. Go to Screen 46, Elections. *See 2020 Instructions for Schedule B (Form 1040), page 2. The amount entered as municipal bonds correctly gets asdded back on the NYS return on line 20. Specified private activity bond interest $ 10 . According to IRS instructions, if you entered a net amount of interest in Box 3, Box 12 can be left blank. 13 . The second de minimis rule is the De Minimis Market Discount Rule, which only indirectly applies to OID bonds, but has significant effects, particularly Reporting interest and bond premium. Commissioner of Revenue. 00 Bond premium- Tax-exempt obligations (AMT, noncovered lots) 0. C. I also have the same issue with my 1099-INT where my bond premium (box 11) is greater than interest income (box 1). The premium paid for a bond represents part of the cost basis of the bond, and so can be tax-deductible, at a rate spread out (amortized) over the bond’s lifespan. • Qualified 501(c)(3) bonds. F. Visit the Marietta Development Authority's webpage to learn more about MDA bond financing or contact The Economic Development Division for assistance. See Publication 550. Level 7. According to IRS regulations, any amount reported in Box 12 of Form 1099-DIV is to be treated as "Tax-Exempt Interest Income. § 1. To properly enter this and resolve the diagnostic, net the amount of Municipal Bond interest by subtracting $100 from the $500 total and entering $400 in the applicable Municipal bond input field. My interest income is $0. 1099-INT (Rev. SEE BLOW: If the bond yields tax-exempt interest, you must amortize the premium. Under your last entry on line 1, put a subtotal of all interest listed on line 1. However, in the case of a taxable bond, if you have beenHow to report acquisition premium on tax exempt bonds. with adjustments proper to reflect unamortized bond premium, with respect to the bond, for the period before the date as of which subsection (a) becomes applicable with respect to the taxpayer with respect to such bond. This is because investors want a. For Muni bonds, any Premium amortization (for any premium you paid, other than the accrued interest) will be reported in box 13 _____*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice. 171–2(a)(1) through (a)(4)(i)(B). The phase-out threshold is $1,079,800 for 2022 for married filing jointly. When sold for more of the face value, they are sold with a premium; when less than face value, a discount. on my 1099-Int: Box 8 Tax-Exempt Interest: $544. In Box 111 - State of origin, enter the 2-digit state code. By contrast, premium bonds are rarely offered in the taxable market. 30% (0% in CA, CT, NY) The income earned in these funds is fully taxable at the federal level. UltraTax CS TL 32075 Form Field Name Not Shared . Section 171 (a) (2). with adjustments proper to reflect unamortized bond premium, with respect to the bond, for the period before the date as of which subsection (a) becomes applicable with respect to the taxpayer with respect to such bond. For a tax-exempt obligation that is a covered security acquired on or after January 1, 2017, shows the tax-exempt OID on the obligation for the part of the year you owned it. 25% of permissible premium). Box 13 refers to the bond premium on tax-exempt bonds. The price you pay for the bond will include this accrued interest. I. HOME Form 8949. Specified private activity bond interest $ 10 . Actually, there is not a deduction for the premium you paid for your tax-exempt bonds on your federal return. (March 27, 2023) As part of ongoing efforts to improve service for the tax-advantaged bond community, the IRS accepts electronic filing of Form 8038-CP, Return for Credit Payments to Issuers of Qualified Bonds. 171–4 for rules relating to the election to amortize bond premium on a taxable bond. section 1. This amortized amount is not deductible in determining taxable income. When Owned by Trusts or Estates: Under Conn. Market discount $ 11 . Therefore, the amount of bond issuance premium is $10,000 ($110,000−$100,000). For this example, Form 1099-Int has 17,000 in box 3 (for treasury bonds) so on the state return (SC) there's a subtraction from federal taxable income for 17,000 on page 2 of SC1040 to arrive at state taxable income which makes perfect sense to me since treasury bond interest is nontaxable to the state. For a tax-exempt covered security acquired at a premium, box 13 shows the amount of bond premium amortization allocable to the interest paid during the tax year. 171–1, the amount of bond premium is $10,000 ($110,000−$100,000). 1. Enter your 1099-INT information, select Continue. (iii) Bond premium allocable to the first accrual period. But, Turbo Tax is only adding the excess of tax exempt interest over bond premium on tax exempt bonds (similar to the calculation on line 2a of Form 1040) to federal AGI to arrive at CT AGI. During the life of the bond, the premium amount is amortized and reduces the amount of t/e interest income received. The second de minimis rule is the De Minimis Market Discount Rule, which only indirectly applies to OID bonds, but has significant effects, particularlyReporting interest and bond premium. 8 billion Vanguard Tax-Exempt. S. (If the bonds are tax-exempt bonds, any such. It has four check boxes. ) For a callable bond, the call price becomes. GENERAL OBLIGATION BONDS $102,370,000 Series 2021A Tax-Exempt Bonds $531,385,000 Series 2021B Taxable Bonds Dated: Date of Delivery Due: As shown on inside cover The Series 2021A Tax-Exempt Bonds (the “Series 2021A Tax-Exempt Bonds”) and the Series 2021BAnalyst Note. This amount is included in line 8. R. 89%. If you receive income from bonds or other obligations that are exempt from Illinois Income Tax, the exempt amount you are entitled to claim is the interest net of bond premium amortization. read more03-06-2023, 09:01 PM. Currently our investments are 33% in tax deferred accounts, 5% in Roths and >60% in taxable accounts. To report the amortized bond premium by: Login to Turbo Tax; Jump to Income and Expenses. A trust has amortizable bond premium on both in-state tax exempt bonds and out of state tax exempt bonds. From a tax standpoint, life would be much simpler if all bonds were pur-chased at their par value. Go to Screen 46, Elections. For bonds issued after 1984, the OID is treated as interest. Generally, there will not be a loss. Bond premiums on tax exempt are not adjusted at the federal level. (2) Taxable bonds. Y. If you disposed of the obligation or acquired it from another. What should I enter in the Type Code field in the interest and dividends statements? How do I enter income from a private activity bond?However, if you acquired a tax-exempt bond at a premium, only report the net amount of tax-exempt interest on line 2a of your Form 1040 or 1040-SR (that is, the excess of the tax-exempt interest received during the year over the amortized bond premium for the year). Market Discount —For a taxable or tax-exempt covered security,Exception for De Minimis Bond Premium: If the net premium and accrued interest received from the sale of bonds is not more than $50,000, the city or town, with the approval of its mayor, city or town manager or select board (as applicable), may apply such amount to the payment of indebtedness. 22:. 113–295, § 221(a)(29)(A), amended subpar. Tax-exempt interest distribution (from your 2022 Tax Statement. 67. 6045-1(a)(15)(i)(C) to determine if a debt instrument is a covered security. §1. If a regu-lated investment company (RIC) within the meaning of section 851 has excess bond premium for an accrual periodThis amortized amount is not deductible in determining taxable income [*]. - Market discount (noncovered lots) 0. A separate clarification, I net purchased accrued interest (purchased interest) and box 13 on 1099 INT (Bond Premium on TEB) against total Tax Exempt Interest (Box 8 on 1099 INT). You can see the $368 loss is not taken. 6045-1(a)(15) to determine if a debt instrument is a covered security. April 11, 1980. Form . Acq. If your client is subject to state tax, you'd need to look at the supplemental info to determine the out of state portion that would be subject to tax in each state. Adjustments can be entered in Adjustments, Screen 40. (iii) Bond issuance. Go to Interest and Dividend Income. This amount is included in line 8. Note: If both bond premium and nominee interest are present on the same interest record, the nominee adjustment is calculated first, and the entry for bond. 06 and bond premium is $1. A Longstaff study found that the marginal tax rate embedded into the short term tax-exempt municipal rates is able to identify an average marginal tax rate during a particular period of 41. Therefore, a tax-exempt bond purchased at a premium and held to maturity may result in no capital loss at maturity, because the basis will have been adjusted down to the bond’s face value. Specified Private Activity Bond Interest — Shows tax-exempt interest subject to the alternative minimum tax. Since rates appear to be plateauing, longer-term funds might be better located in bond funds with longer durations. §12-701(a)(10)(A)(vi) and (vii), any interest on indebtedness incurred or continued to purchase or carry obligations or securities, the interest on which is exempt from Connecticut income tax, and the amortizable bond premium for the taxable year on any bonds or obligations, the interest. Market discount on a tax-exempt bond is not tax exempt. TTB, Pub 17 & Pub 550 seem to say the Acquisition premium of a tax exempt bond must be amortized - but how is this done? tax-exempt bonds and, if a tax-exempt OID bond purchased at the issue price in the initial offering is held to maturity, any OID associated with the bond would be treated as tax-exempt interest. In TaxSlayer Pro, tax-exempt interest and dividend income can be entered from two different menus within Form 1041. 1. In the case of any bond the interest on which is excludable from gross income, no deduction shall be allowed for the amortizable bond premium for the taxable year. Subtract this amount from the subtotal, and enter the result on line 2. The financing is. For a specified private activity bond with OID, report the tax-exempt OID in box 11 on Form 1099-OID and the tax-exempt stated interest in boxes 8 and 9 on Form 1099. Issued on or before 9/27/85. Note: Enter the amount of bond premium adjustment that should carry to Schedule B as amortized bond premium adjustment. Form 1099-OID, Original Issue Discount, exists to report income when bonds, notes, or certificates of deposit (CDs) are sold at a discount from their maturity value. 03-06-2023, 09:01 PM. The discount is also amortized and increases the amount of t/e. If you acquired a tax-exempt bond at a premium, you are only required to report the net amount of tax-exempt interest (that is, the excess of the tax-exempt. Except as provided in paragraph (c)(3) of this section, a taxable bond is any bond other than a tax-exempt obligation. Fund size: $31 billion. Market discount $ 11 . 00 11- Specified private activity bond interest dividends (AMT) 0. 6 percent bracket). As of November 13, 2023, the fund has assets totaling almost $16. (iii) Bond premium allocable to the first accrual period. The total amount or a portion of tax-exempt income (reported as Specified Private Activity Bond Interest) must be taken into account in computing the federal alternative minimum tax applicable to individuals, and may be subject to state and local taxes. Form 8038-CP - Availability of Electronic Filing; Mandatory Electronic Filing for Certain Filers in 2024. In box 11, Bond Premium, put the amount. 9. Bond Premium on tax-exempt bonds - 1099Hello,I am preparing a tax return for a client that has nothing but tax-exempt muni bonds in her portfolio. (c) General rule —(1) Tax-exempt obligations. Tax-exempt and tax credit bond CUSIP no. What should I enter in the Type Code field in the interest and dividends statements? How do I enter income from a private activity bond? However, if you acquired a tax-exempt bond at a premium, only report the net amount of tax-exempt interest on line 2a of your Form 1040 or 1040-SR (that is, the excess of the tax-exempt interest received during the year over the amortized bond premium for the year). I. 44 of bond premium on May 1, 2000, and $3,551. The tax rules in each of these situations can be fairly elaborate and often require an investor to make elections and keep detailed records on the bond. A factor that can greatly reduce the price volatility of bonds is the presence of. 10) ($82. Box 12 of the Form 1099-DIV shows your tax-exempt income dividends. - Bond premium- Tax-exempt obligations (AMT, noncovered lots) 0. Till recently the taxable account and Roths had all stocks and the tax deferred had almost all bonds and a small amount of stock index funds. If the amount of your bond premium amortization for an accrual period is more than the qualified stated interest for the period, you can deduct the difference as a. A copy of Form 1099-OID will be sent to the IRS. read more Bond premium Bond premium on Treasury obligations Bond premium on tax-exempt bond Tax-exempt and tax credit bond CUSIP no. If only two of the three agencies rate. Learn more. It doesn't matter how you split up the interest in. I also have the same issue with my 1099-INT where my bond premium (box 11) is greater than interest income (box 1). 52 in 2009. However, each year you must reduce your basis in the bond (and t ax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year using the constant yield method. For federal tax purposes, the individual won’t pay taxes on the interest. If the bond yields tax-exempt interest, the taxpayer must amortize the premium. A holder may elect to amortize bond premium on a taxable bond. Tax Topic 403 - Interest Received. 8 billion Vanguard Tax-Exempt. I'm. 9. Tax-exempt interest $500, $100 of which is attributable to accrued interest. On the 1099-INT box 13 has an amount of $ 13,833 of which all is under "Tax-exempt obligations (covered lots)". A new box 13 has been added to Form 1099-INT to report bond premium on tax-exempt bonds. The discount is also amortized and increases the amount of t/e. State tax withheld $ $ Form . 4077, Tax-Exempt Bonds for 501(c)(3) Charitable Organizations and IRS Publication 5271, Complying with Arbitrage Requirements: A Guide for Issuers of Tax-Exempt Bonds. Is the line 8 amount already "adjusted" for the line 13 amount, or is the interest I sh. • All other tax-exempt private activity bonds. 6045-1 (n) (7) (ii) (A). S. When bonds are purchased at a premium, a prorated portion of the premium is tax deductible each year. (ii) Amount of bond issuance premium. Because discount bonds are sold below face value, it is expected. In eras of slimmer returns, taxes take on added importance to portfolio performance. In the 1954 Code, only IRC § 103 dealt with qualification requirements for municipal bonds of all types. (3) Cross reference. (B) generally. If the bond yields tax exempt interest, a taxpayer must amortize the premium. If the bond yields tax-exempt interest, you must amortize the premium. Fidelity Government Money Market Fund (SPAXX) 0. Municipal Income Fund would calculate that portion of the tax-exempt interest dividends they received from the fund that may be exempt from Massachusetts income tax. State identification no. 00 5- Investment expenses 0. Where is the Definition of Governmental Bonds? Treas. But even though no deduction is allowed, tax-exempt bonds still must amortize the premium on the books under IRC. The remaining discount is treated as OID on a taxable bond. Vanguard Tax-Exempt Bond Index Fund Admiral Shares (ticker: VTEAX) 0. 00 Bond premium- Tax-exempt obligations (AMT, noncovered lots) 0. Amendments. Under § 1. The interest payments on the bond are qualified stated interest. This premium is due to the fact that the bond is paying a higher interest rate than the stated rate for similar bonds. Enter the amount in Amortizable bond premium on tax-exempt bonds. Unlike Tax-exempt interest dividends (Box 12 in 1099-DIV) which TT has a additional adjustment section for that I assume applies for Federal as well as the states we. Taxable OID, tax-exempt OID and bond premium are reported on Form 1099-OID like yours. Referenced Sources: Massachusetts General Laws. But, Turbo Tax is only adding the excess of tax exempt interest over bond premium on tax exempt bonds (similar to the calculation on line 2a of. read more 1 Solution. It is possible to acquire an OID bond in the secondary market at a premium. read more Box 8 is showing the gross / total interest I received on these bonds, but there is nothing showing in other boxes (including box 13), even though I bought these bonds at a premium. I invested in bond funds (as mutual funds and ETFs) that gave me a 1099 and received dividends, capital gains. 6045-1(n)(5) that you did not want to amortize the premium under section 171, or for a tax-exempt covered security acquired at a premium, your payer mayThe adjustment will reduce your amount of reportable tax-exempt interest on Form 1040, line 8b. 10. tax-exempt Bond with bond premium must amortize the premium over the term of the Bond, reducing the basis in the Bond by such amortization. System’s Associate Vice Chancellor for Finance and other appropriate System staff will ensure that immediately following the issuance of tax-exempt debt, the following occurs: 5. The TIC for the most recent tax-exempt bond sale on June 8, 2022, was. I can't do a manual adjustment as I'm doing a standard deduction, not itemized deduction. 1099 Int - What is the difference between 1099 int Line 13 bond Premium on Tax Exempt says 30,000 and ajustments to interrest portion which says adjustment to bond premium tax exempt $10,000?. Follow these steps to make a manual adjustment for the bond premium you paid on your tax-exempt and taxable bonds: Select Federal Taxes. Where do I report this and also the acquisition premium amortization? TurboTax Deluxe. 4- Federal income tax withheld 0. Level 3. Vanguard's $199 billion municipal bond lineup includes a wide range of actively managed national, state-based, high-yield, and money market funds, as well as the $20. You would enter that on Screen 11 under Tax-Exempt Interest on the line for "Amortizable bond premium on tax-exempt bonds". tax-exempt bonds. Fund management. The reissuance rules apply to all tax-exempt bonds from a large bond issue to a small. Box 11. Tax software shows 6,400 on form 1040 line 2a (Exempt interest). Under Wages & Income select Interest on 1099-INT. For a taxable covered security acquired at a premium, unless you notified the payer in writing in accordance with Regulations section 1. Tax-Exempt Bond CUSIP No. At least, that's how it's handled for tax-exempt Muni Bonds. Fidelity Learn. Because individual bonds and bond funds distribute income differently and treat your principal differently, there are also some differences in how that income and any capital gains are taxed. For taxable bonds, the adjustment will reflect on Schedule B, Part 1. Make a note for next year's file. There are three entries block 7 the description (name), box 11 Tax exempt OID ($3700) and block 6 acquisition premium ($790). The bonds mature at par so the total premium paid is $7,485 ($107,485-$100,000. For a tax-exempt covered security acquired at a premium, box 13 shows the amount of bond premium amortization allocable to the interest paid during the tax year. Original issue discount (OID) is a form of interest. Select I need to adjust the taxable amount, select Continue. Page 3 of 10 * This is important tax information and is being furnished to the Internal Revenue Service. BOND ORIGINALLY ISSUED AT A PREMIUM HELD TO MATURITY (023015K58) ISSUER: CITY A Coupon: 2. linduca1216. The IRS says: "For bonds issued after September 27, 1985, you must amortize bond premium using a constant yield method on the basis of the bond's yield to maturity, determined by using the bond's basis and compounding at the close of each accrual period. Bond premium $ 11. The current dispute came about in. 1041-US: Interest, dividends, and tax-exempt income FAQs. Check it out. 171–2(a)(4)(i)(B) as of the end of the holder's accrual period in which the bond is sold, retired, or otherwise disposed of, the holder. Panama Canal Zone Bonds (exempt under 31 U. In accordance with IRS-mandated changes, there are several modifications to Form 1099-INT, including: • Line 11 now reflects total bond premium for taxable covered lots; there. For a specified private activity bond with OID, report the tax-exempt OID in box 11 on Form 1099-OID and the tax-exempt stated interest in boxes 8 and 9 on Form 1099-INT. S. (C) Carryforward in holder's final accrual period —( 1) If there is a bond premium carryforward determined under § 1. or. linduca1216. Here's what you need to know about this type of interest and tax form. The following includes answers to common questions about interest, dividends, and tax-exempt income. Reporting interest and bond premium. 67. 07. Under your last entry on line 1, put a subtotal of all interest listed on line 1. For this purpose, a bond can be in any form of indebtedness under federal tax law, including a bond, note, loan, or lease-purchase agreement. See line 4. Clarifications would be appreciated, if I am doing this wrong. A portion of your income. For each year that the premium is amortized, Janice’s cost basis (the $1,030) is reduced by the annual $10 amortization under IRC § 1016 (a) (5) and reflected by the broker as well under Treas. 74 years, while the duration of the 3% premium bond would be 4. 1, 2023. ”. I would, however, use D4 for what's reported in Box 13 for covered securities and reserve E (T) for noncovered securities where amortization would have to be computed offline. 1099-OID - THIS FORM WAS CHANGED FROM AN AGGREGATE FORM FOR A CUSIP TO A FORM FOR EACH TAX LOT: • Two new boxes were added: market discount and acquisition premium. What if I have income from obligationsAn individual who received $421 in interest from bonds issued by another state and purchased after December 31, 2011, will have to “add back” $421 to the amount of income used to calculate the tax obligation for Indiana. Tax-exempt bonds are barred a deduction for amortizable bond premiums under IRC section 171 (a) (2). In the case you provided where there is $30,000 of tax-exempt interest. While still exempt from Federal Income Tax, such amounts will be reported to the Internal Revenue Service. Click on the box My form has info in more than just these boxes (this is uncommon). Premium. IF you don't, the accrued interest will be divided up proportionately (and improperly) among boxes 1, 3. When sold for more of the face value, they are sold with a premium; when less than face value, a discount. 205 Lawrence Street. NUVEEN INSD TAX-FREE ADVANTAGE MUN FD 1. State. The tax reporting requirements outlined are not appli-cable if bonds are owned inside an IRA or other retirement plans. Capital Group veteran municipal manager Chad Rach will transition out of American Funds Tax-Exempt Bond on Oct. 00 Market discount (noncovered lots) 0. On June 18, 1993, the Department of the Treasury (the Treasury Department) and the IRS published comprehensive final regulations in the Federal Register (TD 8476, 58 FR 33510) on the arbitrage investment restrictions and related provisions for tax-exempt bonds under sections 103, 148, 149, and 150, and, since that time, those final regulations. 17 . Bond premium- Tax-exempt obligations (noncovered lots) 0. Then by entering the premium amount on line 10, the net reported tax-exempt interest will be reduced. 73. See Regulations section 1. Sixty percent of any gains will be taxed at a long-term capital gains rate of 20 percent. With TurboTax Deluxe open. 07 percent, compounded annually. The coupon rate of interest is 10% and has a market rate of interest at 8%. Let us consider an investor that purchased a bond for $20,500. For the purpose of this example, assume an investor had a tax-exempt interest dividend distribution of $1,000. 04 How to Choose a Bond Financing Structure 13(ii) Tax-exempt obligations. 50 with respect to bonds G and H. In general, see how to report tax-exempt interest in the Instructions forwithholding. This entry is used to reduce taxable interest entries that carry to Schedule B. Ask Your Own Tax Question. 16 . Calculation. A Specified Private Activity Bond is issued to encourage private-sector investment in the development of certain facilities that serve specified public purposes, Included are exempt interest dividends paid by mutual funds that are attributable to like activities. Box 6 - Acquisition premium. The 2017 tax law increased the phase-out thresholds for AMT meaning fewer filers will be subject to AMT under the new tax laws. Select Federal Taxes.