How do you make the available elections after purchasing a bond in the secondary market at a premium? Turbo tax amortizes the bond premium and does the tax return wrong.

[TheTaxWanderer]

Turbo tax seems to just assume that you want to amortize the bond premium and it uses the method that the broker uses in calculating the "bond premium" on the 1099-int.  

First of all, if you, the tax payer, want to do it that way, Turbo tax is not handling making the election, as you would sometime need to make a section 171 election.

Second of all, if you don't want to amortize the bond premium, Turbo Tax does not even let you do that.

I am also confused as to how Turbo Tax can know if the bond premium applies to any of the interest showing on line 1 of the 1099-int.  

[fanfare]

If you don't want to amortize, don't enter that premium.
I'm no bond guru and don't know about sect 171.

[TaxGuyBill]

There are MANY things that TurboTax does not do.  If you want to make an election that TurboTax does not support, you would need to override the software and manually make the election with your mailed tax return.

[Anonymous]

§ 1.171-4 Election to amortize bond premium on taxable bonds.

(a)Time and manner of making the election -

(1)In general. A holder makes the election to amortize bond premium by offsetting interest income with bond premium in the holder's timely filed federal income tax return for the first taxable year to which the holder desires the election to apply. The holder should attach to the return a statement that the holder is making the election under this section.

as to the last sentence. in over 30 years i never seen it done and I've never seen the IRS make a change to a return 

perhaps that's because the word is "should" rather than "must"

[TheTaxWanderer]

In your post, you quote part of the tax code, "The holder should attach to the return a statement that the holder is making the election under this section."
My complaint is that Turbo Tax does not do this, even though it should.  But, good point about the tax law saying that you "should," instead of you "must."

This part of your post I don't understand:
as to the last sentence. in over 30 years i never seen it done and I've never seen the IRS make a change to a return
What does the pronoun "it" refer to?