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Level 1
September 22, 2019
Question

How to treat Interest received on defaulted corporate bond

  • September 22, 2019
  • 2 replies
  • 38 views

I received a coupon payment for $500 in June on a corporate bond.   3 months later in September the company filed for bankruptcy.  Do i have to pay tax on the $500 coupon, or can I use the $500 to reduce my basis?

    2 replies

    Hi Palms
    Level 7
    September 22, 2019

    you pay tax on the interest.....capital loss on the bond in the year in becomes worthless.

    Level 15
    September 23, 2019

    capital loss also in the year you sell it  🙂