When you receive your 1099-B it will show the redemption of the bond with the amount that you were paid when the bond was called as the sales price.
The only thing that you will have to pay tax on is the profit earned on that bond redemption so in the next box should be the basis, or the amount you paid for the bond. In this case, the amount that you paid for the bond is the amount that you originally forked over plus all of the "non-taxable interest" that the bond earned while you held it.
If the sales price is larger than the basis then you have a capital gain. You'll pay tax on that.
If the sales price is smaller than the cost basis you have a capital loss. You get to deduct at least some of that on your tax return.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
