Accrued Market Discount

[intuitjl]

Do I need to add accrued market discount to schedule B if I sell the bond at a loss. TT does not report the AMD on schedule B. I could not find any information on this on the IRS website but found two conflicting articles. One said you don't report on schedule B if a loss (which makes sense and is what TT is doing). The other said you still need to report the AMD on schedule B.

[baldietax · Accepted solution]

do you have a link/context on the 2nd article why it said the AMD would be reported on Schedule B even if sold at a loss.... and do you have an example where you have AMD and a loss on 1099B?

https://www.irs.gov/pub/irs-pdf/p550.pdf

Pub 550 "Capital Gains and Losses" / "Discounted Debt Instruments" section on p75 says "Treat your gain or loss on the sale, redemption, or retirement of a bond or other debt instrument originally issued at a discount or bought at a discount as capital gain or loss, except as explained in the following discussions"... and for "market discount bonds" only gains up the amount of AMD would be transferred to Schedule B... the Form 8949 worksheet to calculate what should be reported on Schedule B zeros out a loss and takes the smaller of that and the AMD i.e. 0.