I own some municipal bonds and some treasury bonds. On the tax information that came from my broker today, it lists non-covered bond premiums. I haven't bought or sold any of them. What are they, and do they have to be mentioned on my tax return? If so, how?
Is this something new? I've never noticed it before.
It's the "improved" method of making sure that taxpayers report bond interest correctly, adjusting for differences in purchase/sale price from face value. In the past, many taxpayers would incorrectly assume any difference between purchase and sale/redemption price on a bond was a capital gain/loss.
It's all part of the cost basis tracking changes enacted in 2008 which have been slowly introduced since 2011.
Ira Smilovitz
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