I have a Muni Bond that is tax exempt.
if you bought the muni bond at a premium amortization of the premium is required over the life of the bond so that at maturity your adjusted cost basis and redemption price are equal. muni bond premium amorization is on line 13.of the 1099-int. since the bond was called before maturity there may still be unamortized bond premium.
the broker apparently did the amort for you and reported it on the annual 1099 consolidate report (that's how the amount got on line 13. it would only be subtracted from line 8 and the net reported in box 2a on the 1040. the 1099-B will might report the correct sales price and adjusted cost (cost less amortization of premium). it's just that the cost will not be reported to the IRS.
line 11 is for taxable bond premium amortization
for long-term taxable bonds (other than US Savings Bonds) I believe OID reporting was required since the 1980's
to read up more on his subject see IRS 1212
https://www.irs.gov/pub/irs-pdf/p1212.pdf
the option to report interest yearly or at maturity applies to US Savings bonds.
Reporting the interest all at once at the end
When electronic EE Bonds in a TreasuryDirect account stop earning interest, they are automatically cashed and the interest earned is reported to the IRS.
You can see the interest on your IRS Form 1099-INT.
If a financial institution pays the bond, you will receive a paper 1099-INT from that financial institution either soon after you cash your bonds or within the first two months after the end of the year in which you cash your bonds.
If you cash electronic bonds in your TreasuryDirect account, your 1099-INT will be available early the next year in your account. (Video)
Reporting the interest every year
You may, however, choose to report the interest every year.
You may, for example, find it advantageous to report interest every year
Note: You do not actually receive the interest every year even if you report it that way. The interest that the bond earns is reported on a 1099-INT after the bond is cashed or is reissued to reflect a taxable change in ownership. The 1099-INT will show all the interest the bond has earned over the years. Go to IRS Publication 550, Investment Income and Expenses, for instructions on how to tell the IRS that you already reported some or all of that interest in earlier years.
Once you start to report the interest every year you must continue to do so every year after that. for all your savings bonds and any you acquire in the future.
