Bond Taxation: A Simplified, Conceptual Overview of Bond Taxation

The purpose of this video is to provide a conceptual overview of bond taxation, including the 3 types of interest, how taxable interest is calculated, how accrued interest is treated, how capital gains or losses are figured for bonds, amortization of bond premiums, and how taxable income is reported.

Table of Contents
00:00 Introduction
01:40 Accrued Interest
03:53 Original Issue Discount
04:45 How Market Discount is Taxed
07:50 How to Calculate Capital Gains or Losses
09:03 Amortization of Bond Premium
11:15 Form 1099-OID and Form 1099-INT
11:46 Wrap-Up


Links
Publication 550 (2021), Investment Income and Expenses | Internal Revenue Service
https://www.irs.gov/publications/p550...
About Schedule B (Form 1040), Interest and Ordinary Dividends | Internal Revenue Service
https://www.irs.gov/forms-pubs/about-...
About Form 8949, Sales and other Dispositions of Capital Assets | Internal Revenue Service https://www.irs.gov/forms-pubs/about-...
About Schedule D (Form 1040), Capital Gains and Losses | Internal Revenue Service https://www.irs.gov/forms-pubs/about-...

Taxation of Bond Income
https://thismatter.com/money/bonds/bo...

Topics Covered:
How Bonds Are Taxed
Overview of Video
Tax Treatment of Bonds Depends on 6 Primary Factors
4 Types of Bond Income
Accrued Interest
Coupon Bonds
Dirty Bond Price = Clean Bond Price + Accrued Interest
Accrued Interest Tax Treatment for Buyer and Seller
TD Ameritrade Listing for Microsoft Bond
Bond Calculator: TD Ameritrade
Schedule B, Interest and Ordinary Dividends
Example of Tax Treatment of Accrued Interest to Seller
Example of Tax Treatment of Accrued Interest to Buyer
Original Issue Discount Bonds
OID for some bonds does not have to be reported.
OID Accrues Daily
Form 1099-OID: Accrued OID
How Market Discount is Taxed
Market Discount Bonds
Choosing to include market discount in income currently.
Accrued Market Discount
Accrued Market Discount: Ratable Accrual Method
Accrued Market Discount: Constant Yield Method
Market discount on an OID
Market discount on a bond originally issued at a discount.
Election To Report All Interest as OID
De Minimis Interest Formula
Example: Calculating the De Minimis Interest
How to Calculate Capital Gains or Losses
Example: Calculating the Capital Gain or Loss of a Bond
Form 8949, Sales and other Dispositions of Capital Assets
Schedule D, Capital Gains and Losses
Amortization of Bond Premium
Example: Amortizing a Bond Premium
Amortization of Tax-Exempt Bonds
Government Tax-Exempt Bonds
Capital Gains and Market Discount Interest Are NEVER Tax-Exempt
Form 1099-OID and Form 1099-INT