Called Bond Tax Question
My wife and I inherited a corporate bond that was recently called on December. The value of the bond was $80,000. Do we have to pay tax on the principal or only pay tax on the interest we received? (My wife and I are big fans!)
Terry Says
If you inherited the bond, then your “cost” was the value of the bond on the date of death of the person who left it to you.
Ask your broker — or the broker who held the bond when it was given to you — to go back and find out the price on that date, or contact the bond transfer agent (on teh bank of the bond certificate) to get that historic price. then you will owe taxes on any gain since that cost date. If you have held it for longer than a year, you will pay the lower capital gains tax rate. It’s not likely that you have a loss, though possible.
