Municipal bond amortization

The premium is amortized over the life of the bond. If it's called early, the reported loss is what would have been amortized between the call date and the maturity date.

See IRS pub 550.

You'll have to look at your brokerage statements from when you bought the bond. My broker wraps its commission into the selling price, but I imagine there could be brokers that don't.

R's, John

I thought that, if there is an official call date, the amortization was done over that time period and not the life of the bond. I know I read it somewhere in some IRS pub but I can't find it now.

Oh, the fees are included in the cost basis. I was asking if they could be included when doing the amortization. IOW is the original amount used in the amortiztion the bond + premium + fees or just the bond + premium? I haven't found anything in the Pub. which mentions that cost. My guess would be inclusion but I just wanted to make sure with the experts here :-)

/BAH

Pub 550 is about Investment Income and Expenses. It's the one that has the answer to your question. Read it and see what you find.

Unless you deducted the fees when you bought the bond, which it sounds like you didn't, whatever you paid is what you paid, so you amortize from there.

R's, John

Okay. Thank you!

/BAH