In 2024, I made several purchases of US Treasury Notes that matured in about 6 months, 9 months, and 12 months. My understanding is that these notes are purchased at a discount (less than face or par value) and pay back at face value at maturity. The difference is the interest you earn, reported on a Form 1099-INT.
That seemed to be true for some of the Notes but not for others. For some, I also received a Form 1099-B showing short-term capital gains. Fidelity told me this is because I purchased the bonds at a discount. But all US Treasury Notes are purchased at a discount. Here are the details for two groups of Notes purchased.
| Date | Qty | Price | Princ Amt | Accrued Int | Stlmnt Amt | Coupon | Mat Date |
| 1/29/2024 | 13 | 97.5510 | 12681.63 | 0 | 12681.63 | zero | 7/25/2024 |
| 1/29/2024 | 50 | 96.7420 | 48371 | 62.84 | 48433.84 | 1.00% | 12/15/2024 |
The $13K notes paid interest and had no capital gains. The $50K notes paid interest and generated capital gains on a Form 1099-B. For the $50K group, the 1099-B shows Total proceeds of $50,000 and Cost Basis of $48,433.84. Why doesn't the $13K group have a 1099-B showing $13,000 and $12,681.63 for the Proceeds and Basis. This seems inconsistent.
Why do some Notes have capital gains and others don't?
For the $50K group, do I pay taxes on both the interest and capital gains?
Thank you
