Compared with other bonds, investors buying the discount bonds
in the same par value will pay less.
We understand anecdotally that it is common market practice for taxpayers to report market discount upon payments on or the proceeds of the disposition of market discount bonds
which have been purchased for more than 50 cents on the dollar, and for taxpayers to allocate payments on or the proceeds of a disposition of market discount bonds
which have been purchased for less than 50 cents on the dollar to a return of basis before recognition of market discount or other gain on the bonds, regardless of whether the bonds in question are in default.
Unlike certificates of deposit, where deferred income is currently taxed, market discount bonds
allow income recognition to be deferred until maturity or disposition.
However, the market discount bond
rules supersede this general principle.
As in previous years, various means of tax evasion were reported in the survey, which includes illegal accounting, misuse of overseas transactions and changing assets into discount bonds
or gold bullion and concealing them in homes or car trunks.
If one purchases the 90-day pure discount bond
for $96, which one is able to do via a futures contract, then the rate of return on the 90-day pure discount bonds
Covering those aspects of accounting and auditing unique to investment companies, the guide provides new guidance on accounting for offering costs, amortization of premium or discount bonds
, liabilities for excess expense plans, reporting complex capital structures, payments by affiliates, financial statement presentation and disclosures for investment companies and nonpublic investment partnerships.
There exists a continuum of unit discount bonds
maturing at all times s [element of] [0, T].
The government computes its cost of funds by forming the sum of current coupons on long-term coupon bonds and the appreciation on short-term discount bonds
Prior to the 1982 tax code changes, original issue discount bonds
provided lower interest costs to the issuer as a result of alternative methods of taxing issuer and holder.
Since many of the holders of PIK or deep discount bonds
are tax-exempt pension trust or foreign holders, however, no one is likely to complain about the lack of symmetry in view of the fact that the OID accrual otherwise is a tax-neutral event.
For many investors, the major disadvantage of owning corporate zero-coupon bonds and original issue discount bonds
stems from a negative cash flow.
Market discount bonds
generally do not include any bonds acquired at their original issue.
Limits on Charitable Contributions by Individuals Contributions to 50%-type organizations Amount Percentage Type of contribution deductible limitation Ordinary income Cost 50% property--inventory, depreciable property, agricultural products, oil and gas property, Section 306 stock, OID debt instruments, market discount bonds
artwork by its creator and other property.
Holders of strip bonds are legally allowed to separate the bond into its interest payments, or coupons, and the principal, both of which are then traded as zero-coupon discount bonds
as they pay no interest.