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blh1218
Level 3
February 12, 2020
Question

Treasury Bonds

  • February 12, 2020
  • 6 replies
  • 46 views

My client cashed in $13,275.00 in Treasury bonds and received a 1099-INT from the Department of Treasury for $20,899.65. I would like to think that the difference between basis and the final payment is what should be subject to tax.

 

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6 replies

Accountant-Man
Accountant-Man
Level 13
February 12, 2020

Not necessarily. Some bonds were sold at 50% of face value, therefore the difference between cost and face was interest income. And if they were held past maturity and they continued to accrue interest then that would also be interest income.

IE, $500 face value bond sold for $250, cashed in and received $700. $450 is income.

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    blh1218Author
    Level 3
    February 12, 2020

    Thank you for your response, but what I do not understand is, the face value of the bonds that were redeemed is $13,275.00. Even it was 50% discounted how could the entire $20,899.65.

     

     

    Accountant-Man
    Accountant-Man
    Level 13
    February 12, 2020

    How much cash was received?

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