It depends. First you should receive Form 1099-B if you actually sold or redeemed your tax exempt security. Then the sale or redemption is not tax exempt and would be reported as a sale for tax purposes. The gain or loss would be included with your other taxable income.
The interest on the bond is not taxable, but the capital gain on the sale is. Any capital loss on the sale is deductible.
@magassoc
Please update here if you need further assistance.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
