| T.R | Title | User | Personal
Name | Date | Lines |
|---|
| 663.1 | Tax Due on Unpaid Interest | I18N::GLANTZ | | Fri Jan 21 1994 09:45 | 11 |
| Sorry, the IRS considers the interest you didn't get paid in 1993 on a
zero cooupon bond as "constructively" received by you. You have to pay
taxes on this imputed interest every year until the bond matures. At
that point, no, you don't owe tax on the monster "gain" between the
redemption price and your purchase price.
I could attempt to explain the government's rationale, but why bother
-- those are the regulations.
Sorry you got caught in this situation. Because of this tax rule, most
people put zeroes in tax-deferred accounts, such as IRAs.
|
| 663.2 | Don't you love'm at tax time!? | USCTR1::BJORGENSEN | | Fri Jan 21 1994 12:07 | 5 |
| My father-in-law wanted to give my daughter zero coupon bonds at the
time of her birth - I asked for the cash instead! You have now
experienced the beauty of zero coupons!
The goernment put the plug on zero coupons a while back...
|
| 663.3 | zeros and taxable interest | NOODLE::DEMERS | | Tue Jan 02 1996 08:54 | 18 |
| Each of my daughters has a ZCB in their name. When first purchased, I
calculated the yearly interest based on the -very- complex formula that the IRS
supplies it the "OID" pamphlet that they publish. The interest starts out slow
and then gets larger over the years. In my case, it stays well below the
unearned interest threshhold for the kids for the bulk of the bond's existence.
However, towards the end, it does go over $500/year. Is the unearned interest
limit still $500 for under 14? If so, will they have to file when it goes
above?
If the rate wasn't so attractive, I would be kicking myself now for getting
something so complicated.
Would the IRS' hotline know how to handle this?
tnx
Chris
|
| 663.4 | three zeros escaped the imputed interest tax | ASDG::HORTON | paving the info highway | Wed Jan 03 1996 16:19 | 16 |
|
There are a few bonds that were issued in the early 1980s that
slipped through a temporary IRS loophole where the holder does
NOT have to report the imputed interest year-by-year:
GMAC zr2012
GMAC zr2015
SeaRiver Maritime (Exxon subsidiary) zr2012
The first two are listed every day in the WSJ commercial bond section.
I haven't seen the Exxon zero listed, but any bond broker can quote it
for you. Try Charlie Cox at Paine Webber in Boston.
-Jerry
|