Investors & landlords

It is only the interest from a municipal bond that is federally tax-exempt.  Capital Gains and losses on municipal bonds are reportable and taxable.  Once you enter your correct Cost Basis, you may have a small gain or a small loss in most cases.

Your Cost Basis is the amount you paid for the bond, plus accumulated interest over the years (plus any broker costs), which should be close to the 50K proceeds you received. 

There is a box to check when entering your 1099-B to indicate you need to Adjust Cost Basis. On the next screen you can enter your correct Cost Basis.

If you buy a bond when it is issued and hold it until maturity, you generally won't have a capital gain or loss, so you could enter 50K as your Cost Basis if you can't calculate the actual amount of interest received over the years.

Here's more detailed info on bonds in this Guide to Investment Bonds and, if you had other costs/discounts, this article on Cost Basis for Bonds may guide you.