IRS Releases Final Rules On Bond Premium Carryforwards

Law360, New York (January 14, 2014, 3:23 PM EST) -- The Internal Revenue Service on Tuesday released final regulations explaining how bondholders whose investment in a bond is greater than the amount payable should treat the amount differential for tax purposes.

Under previous regulations, bondholders who chose to amortize the difference, known as a bond premium, generally would have had a capital loss when disposing the debt instrument instead of an ordinary deduction. But Tuesday's regulations allow those bondholders to now deduct all or part of the bond premium when selling the instrument instead of recognizing...
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