Bond Amortization Question

I would say if it's a deep discount bond you would report income based on the interval through 12/31/2005. I'm unclear though how deep the discount needs to be before you need to do this at all. Is there a formula for this? Steve

Read publication 1212. It has a group of formulas along with other methods. You would use a 'constant percentage' factor that would result in the discount being recognized each year in amounts that would ultimately total the diffference between maturity value and purchase price. Each year's income would be reported. If the bond was not purchased at the issue price, then the discount or premium should be added or deducted from the taxable amount.

-- Atticus Thomas, CPA

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I have a question: if one purchases and holds the bond within a brokerage account, does the interest attributable to market discount/premium get included in the amounts shown on the 1099B?

Second question: for a bond that trades close to par value, can one assume the bond was issued at a price of 100 or does one need to go back and find out what it actually was priced at when issued?

Steve