After the end of the tax year, your financial institution or the bond issuer should send you a Form 1099-INT reporting all the taxable and tax-exempt interest you received during the year. Typically, interest from corporate bonds will be in Box 1, interest from U.S. Treasuries will be in Box 3, and tax-exempt interest from muni bonds will be in Box 8.
If you buy a bond when it is issued and hold it until maturity, you generally won't have a capital gain or loss. However, if you sell the bond before its maturity date for more than you paid for it, you'll typically have a capital gain. If you sell it for less than you paid for it, you'll usually have a capital loss. After the end of the tax year, your financial institution will send you a Form 1099-B reporting any bond sales that took place during the year.
If you have Accrued Market Discount in Box 1f on your 1099-B, enter the accrued market discount in TurboTax and do not check anything on the next page. The accrued market discount is then treated as ordinary interest on Schedule B, and is also added to the basis, thus only taxed as ordinary interest. The D code is present on column 1f of form 8949.
Here's more detailed info in Guide to Investment Bonds you may find helpful.
[Edited 2/21/2024 | 11:33 am]
@Greg Brown
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
