On May 30th, I purhcased a 6-month zero-interest T-bill for $9760.00 from the treasury. On November 30th, I redeemed it for $10000. How do I book it? When do I book it? If I treat it as a short-term capital gain, the net effect is the same on my US taxes, but I don't want to pay state income taxes on the $240 gain. Do I book $9760 as the sale price and also $240 interest on November 30th? Do I book the purchase price as $10000 with $240 in interest on May 30th?
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As interest. On 30 Nov 2006. The broker should give you a 1099-INT showing $240 in US obligations interest.
You don't.
Most brokers don't report T-bill redemptions at maturity. If the broker doesn't report the redemption, you report nothing on Sched D (though of course the interest gets reported on Sched B). If the broker does report it, then you report it on Sched D with basis and proceeds both $10,000 and zero gain or loss.
The $240 is interest income, not capital gain. As such, it is taxable by the feds and not taxable by any state of the union. Your cost basis is what you paid for the bond plus the interest income you report.
$240 as interest on the 2006 tax return. (You are talking about last year right?)
Excluded from state taxes.
No need to enter a date for the interest.
it is interest income from US Treas
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