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Can one offset accrued short term bond gain but short term loss on other sales? Sorry- needed to edit but could not
Fidelity, on its tax reporting page for planning purposes, calculates one's ongoing short and long term losses over the year and includes accrued market discount gains there rather than in interest income, where realized OID gains are generally reported. I have seen some sites where accrued market discount gains on bonds, in my case Treasuries, can be reported as short or long term capital gains- for example on Fastercapital.com
However, it's not clear to me whether this is actually true; if it is how would one report in TT the offset of short term loss of sales of T bonds/notes against the accrued discount of matured short term gains or is it simply treated like OID? IRS Pub 1212 is not helpful on this point.
Thanks
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Can one offset accrued short term bond gain but short term loss on other sales? Sorry- needed to edit but could not
After more research the answer seems to be - no. For Bills it doesn’t matter on the federal level since it is short term and treated like ordinary income. For long term gains on Notes/Bonds held to maturity, the AMD (by the fed and the state of CA) is treated as ordinary income, not as a long term capital gain or as federal interest (CA treats all captured AMD as ordinary income). The only answer to be confirmed is whether you can use lumped sales with losses against AMD gains which I will have to wait and see how it’s reported, but assume there will be no offsets for losses. So if you live in CA or NC, any US bonds are best bought at auction rather than the open market unless in a tax exempt account like an IRA.
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