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Pauly2
Returning Member

How to handle a State of Illinois Zero Coupon Bond Sale on taxes

Since this year the IRS help line which isn’t available, I’d appreciate any help I could get with this concern.

In 2008 I purchased an Illinois State Zero Coupon College Savings Bond which is tax exempt from both Federal and State taxes.   I held it till maturity in 2019 and it was cashed in then.

The problem is I changed brokers a few years back, transferring this holding to my account at Charles Schwab.  Unfortunately, the purchase price was not transferred with it.  I have since misplaced the paperwork and do not remember what I paid for it.  I have called several firms including the originating firm and none can give me the purchase price.

Charles Schwab reported the sale and also reported on their 1099 composite form that the cost basis was missing.  They instructed me to file a form 8949.

Do I have to do so since the bond is not taxable?  And, if I do, how do so and avoid paying an unnecessary tax.

2 Replies
fanfare
Level 15

How to handle a State of Illinois Zero Coupon Bond Sale on taxes

In description enter "Federal+State Tax-free Zero of 2019".

 

Then enter the cost basis equal to the amount received.

fanfare
Level 15

How to handle a State of Illinois Zero Coupon Bond Sale on taxes

i hope you have supporting documentation for your claim of tax-free both federal and state. What was the interest rate ?

If you know the  rate you can calculate what you paid for it i.e. the present value of a zero coupon bond in 2008 maturing in 2019.

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