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bond premium and accrued interest

I bought taxable corporate bonds that each have a premium and accrued interest. If I choose not to amortize the premiums, would I include that amount in the cost basis and report the sale as a capital loss on Schedule D? And since accrued interest is to be deducted from total interest income on Schedule B, would I do that in the year the bond is bought or when it matures?
Reply to
lxhop
wrote:
you need to amortize the premium to the 1st call date
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Reply to
Benjamin Yazersky CPA
Yes, the year the bond is sold or matures.
The year you receive the first interest payment.
Reply to
MyVeryOwnSelf
Why would the premium have to be amortized? Isn't amortization simply an option I can elect that would allow me to reduce my taxes each year until the bond matures? Why can't I decline to amortize and thus pay more taxes each year and then when the bond matures I add the premium to the cost basis and take a capital loss? Where can I find the regulation that requires me to amortize the premium?
Reply to
Paul

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