If the amount of your bond premium amortization for an accrual period is more than the qualified stated interest for the period, you can deduct the difference as a miscellaneous itemized deduction on Schedule A (Form 1040), line 16. A manual adjustment is required. (this will not benefit you unless you can itemize)
But your deduction is limited to the amount by which your total interest inclusions on the bond in prior accrual periods is more than your total bond premium deductions on the bond in prior periods. Any amount you cannot deduct because of this limit can be carried forward to the next accrual period.
IRC SEC 171 and reg 1,171-2
example year 1 interest received $500, ABP $700. on schedule B the $500 interest gets reported along with $500 of ABP. $200 of ABP gets carried forward. to offset 2021 interest
