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For municipal bonds purchased at a discount, the de minimis tax rule determines whether the bond’s appreciation at maturity will be taxed at ordinary income or capital gains rates. The de ...
If you own municipal bonds that are issued in the state you live in, the interest income usually is nontaxable income. You may be subject to short-term or long-term capital gains taxes upon sale ...
The tax-exempt status does not extend to any capital gains from selling the bonds, which are typically taxable. Proper reporting ensures compliance with tax laws and helps avoid penalties.
In contrast, under the regular tax rules capital gains taxes are not paid until the actual shares of stock are sold. For example, if someone exercised a 10,000 share Nortel stock option at $7 when the stock price was at $87, the bargain element was $80 per share or $800,000. Without selling the stock, the stock price dropped to $7.
The interest on municipal bonds is generally excludable from gross income for federal income tax purposes (however, capital gains or accruing market discount are not tax exempt); for these purposes, accruing original issue discount is also treated as "interest" which is excludable from gross income for federal income tax purposes. Some ...
Capital gains taxes come into play when you sell your government bonds before their maturity date. If you sell your bond for more than you paid, the difference could be considered a capital gain ...
If we assume a maximum long-term capital gains tax of 23.8%, the tax savings would be $23,800. ... But gains are often reduced significantly by taxes. Enter municipal bonds. They are fixed-income ...
Consider Municipal Bonds. ... By doing so, you'll avoid paying capital gains taxes on the appreciation. Plus, you can deduct the donation's fair market value on your current year's taxes, assuming ...