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If I am in the 20 percent tax bracket and purchase 6 percent of $10,000 bond for $9,180, how much tax do I owe?

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If I am in the 20 percent tax bracket and purchase 6 percent of $10,000 bond for $9,180, how much tax do I owe?

Postby treacy » Tue Oct 08, 2013 7:52 am

If I am in the 20 percent income tax bracket and If I purchase a 6 percent $10,000 bond for $9,180 plus $156 in accrued interest for a total outlay of $9,336. Then subsequently lets say I receive a $300 interest payment. How much tax do I owe on the interest payment?
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If I am in the 20 percent tax bracket and purchase 6 percent of $10,000 bond for $9,180, how much tax do I owe?

Postby cerin58 » Tue Oct 08, 2013 8:10 am

There is no 20% tax bracket for federal taxes.

So, I must conclude this is a homework question.

You did get the 6 month payment right. Remember to subtract out the interest paid to the seller.

As for the discount, how are you planning to handle that? With taxable bonds, did you have a choice? Give us the answer you found when you read IRS publication 550.

Edit, I see TRO either didn't read the question or didn't understand it. Par for the course.
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If I am in the 20 percent tax bracket and purchase 6 percent of $10,000 bond for $9,180, how much tax do I owe?

Postby bradford » Tue Oct 08, 2013 8:22 am

you don't owe taxes on the purchase of a bond
if you receive $300 interest on the bond and your rate is 20%, that would be $60
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