@mrbiggiesmalls To reiterate what was said in both an answer below previously and what
@Zbucklyo reconfirmed:
the imputed (and ultimately paid out in the form of the increased sale or maturity price) interest on a tax-exempt bond is indeed tax-exempt. However, the difference between the contantly-revised cost basis (as thoroughly discussed in both answers and
@msdalt01 's calculations) and the actual proceeds of selling the bond (or a call price if called) will result in possibly taxable gain or reportable loss. It is not only permissable to report the capital loss, you do yourself no favour by failing to do so.
If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67
NOT INTUIT EMPLOYEE
USAR 64-67 AIS/ASA MOS 9301 - O3
- Just donating my time
**Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.
