Amortizable bond premium is a tax term referring to the excess premium paid over and above the face value of a bond. 00 Box 11 Tax-exempt OID is generally reported as tax-exempt interest on Form 1040. The amount entered as municipal bonds correctly gets asdded back on the NYS return on line 20. However, some bonds, such as municipal bonds, may be exempt from federal and state taxes. Enter a description and a negative amount for the bond premium related to the state tax-exempt interest. For example, consider that an investor purchases a bond for $1,050. However, if you acquired a tax-exempt bond at a premium, only report the net amount of tax-exempt. Box 11. The 2% par bond in our example would have a modified duration of 4. 1, Schedule M-1) and should be sourced to the appropriate State. 22-Sep-2019 6:06am. You. Though interest on these bonds is taxable, they often offer higher. Accrued OID at Purchase = 2 /10 × $200 = $40. 19 of tax-exempt interest on your 2009 return (Form 1040, line 8b) from the discount accretion in addition to the $500. The tax reporting requirements outlined are not appli-cable if bonds are owned inside an IRA or other retirement plans. The city of Marietta offers tax-exempt bond financing through the Marietta Development Authority (MDA) to assist with the. You remove all of the box 3 $$ (and box 12, if any) and put box 3 (plus 12) on it's own 1099-INT before indicating it's accrued interest. S. The following includes answers to common questions about interest, dividends, and tax-exempt income. Lesson 4 also discusses the rules for depreciation of tax-exempt bond financed property set forth § 168 and the rule under § 57(a)(5) that requires individuals and corporations to include tax-exempt interest from “specified private activity bonds” in income for purposes of figuring the alternative minimum tax. Report the bond’s interest on Schedule B (Form 1040A or 1040), line 1. Effective Duration 8. Reporting interest and bond premium. tax-exempt interest received during the year over the amortized bond premium for the year). H&R Block. Gen. Vanguard Ultra-Short-Term Tax-Exempt Fund has no limitations on the maturity of individual securities but is expected to maintain a dollar-weighted average maturity of 1 to 2 years. Any exempt-interest dividends from a mutual fund or other RIC are reported on Form 1099-DIV. You are required to report tax-exempt income on Form 1040, and may be required to report it. 6251 (which most people won't care these days). Level 7. Tax-Exempt Bond CUSIP No. Box 12 Bond Premium on U. " When an existing bond offers a higher coupon rate than the rate currently offered on new bonds, it typically trades above (premium) its par value on the secondary market and becomes a premium bond. 3 [a] of this Part). See 2019 Form 1040 Instructions. Analyze the Fund American Funds Short-Term Tax-Exempt Bond Fund ® Class F-1 having Symbol FSTTX for type mutual-funds and perform research on other mutual funds. The tax-exempt portion of the original issue discount bond with respect to a stripped coupon or stripped bond is the excess of the stated redemption price at maturity (or in the case of a coupon, the amount payable on the due date of the coupon), over an issue price that would produce a yield to maturity as of the purchase date equal to the. State. Report the bond’s interest on Schedule B ( Form 1040A or 1040 ), line 1. S Treasury securities. Is the line 8 amount already "adjusted" for the line 13 amount, or is the interest I sh. Since Connecticut taxes interest on out-of-state bonds, the taxpayer adds back. For an overview of an issuer’s responsibilities in a conduit financing arrangement, see IRS Publication 5005,Your Responsibilities as a Conduit Issuer of Tax-Exempt Bonds. For a specified private activity bond with OID, report the tax-exempt OID in box 11 on Form 1099-OID and the tax-exempt stated interest in boxes 8 and 9 on Form 1099. That is the amortized premium paid above and beyond interest payable on covered securities and is used to offset interest received. In eras of slimmer returns, taxes take on added importance to portfolio performance. State identification no. See the instructions above for a tax-exempt covered security acquired at a premium. C. Box 8 is showing the gross / total interest I received on these bonds, but there is nothing showing in other boxes (including box 13), even though I bought these bonds at a premium. 13 . However, if you acquired a tax-exempt bond at a premium, only report the net amount of tax-exempt interest on line 2a of your Form 1040 or 1040-SR (that is, the excess of the tax-exempt interest received during the year over the amortized bond premium for the year). The banks, however, continued to compute their net income for purposes of the Massachusetts bank excise tax without this adjustment, using original cost basis to yield a loss on redemption. Enter in column C the interest you identified as tax-exempt interest on your federal Form 1040 or 1040-SR, line 2a, and which you received from: The federally exempt interest dividends from other states, or their municipal obligations and/or from mutual funds that do not meet the 50% rule as previously discussed. Amortization of bond premium under IRC Section 171; For. Level 15. Thus, under § 1. Box 3 - Early withdrawal penalty. Market Discount —For a taxable or tax-exempt covered security,Exception for De Minimis Bond Premium: If the net premium and accrued interest received from the sale of bonds is not more than $50,000, the city or town, with the approval of its mayor, city or town manager or select board (as applicable), may apply such amount to the payment of indebtedness. Box 13: Bond premium on tax-exempt bond Go to the Input Return tab. If half of your Social Security benefit plus other income, including tax-exempt muni bond interest, is between $32,000 and $44,000 for a joint tax return ($25,000 to $34,000 for single filers), up to 50% of your Social Security benefits may be taxable. 15 State 16 State identification number 17 State tax withheld FATCA filing requirement . During the life of the bond, the premium amount is amortized and reduces the amount of t/e interest income received. To report amortized bond premiums on tax-exempt bonds from 1099 box 13 follow these steps. My interest income is $0. That tells you how much to amortize on a monthly basis. An investor who purchases this bond has a return on investment that is determined by the periodic coupon payments. 00 5- Investment expenses 0. See Box 13 Bond premium on tax-exempt bond X Box 15 State B&D Interest Income State W/H Box 16 State identification no. The second de minimis rule is the De Minimis Market Discount Rule, which only indirectly applies to OID bonds, but has significant effects, particularly Reporting interest and bond premium. One section of the tax rules pertaining to hedge bonds provides that to avoid a bond becoming a hedge bond, an issuer must. 171–2, if a bond premium election were in effect for the prior taxable years, C would have amortized $3,257. read more Gagan, CPAVTES is a passive fund that seeks to track the performance of the S&P 0-7 Year National AMT-Free Municipal Bond Index. Follow these steps to make a manual adjustment for the bond premium you paid on your tax-exempt and taxable bonds: Select Federal Taxes Under Wages &. Review resources for tax-exempt bond holders in IRS publications. To be included in the Index, bonds must be rated investment-grade (Baa3/BBB- or higher) by at least two of the following ratings agencies: Moody's, S&P and Fitch. (iii) Bond premium allocable to the first accrual period. Tax-exempt and tax credit bond CUSIP no. Contrary to one popular misconception, despite amendments to the Excise Tax Act over the years, no changes were made to the surety bond's status as a non‐commercial activity. 1, 2023. 171–1, the amount of bond premium is $30,000. That means: RISE's gains are taxed differently. However, each. Bonds are still "exempt" from GST/HST and premiums do not include the 5% (or higher in harmonized jurisdictions) tax levy. Interest Income. However, if you acquired a tax-exempt bond at a premium, only report the net amount of tax-exempt interest on line 2a of your Form 1040 or 1040-SR (that is, the excess of the tax-exempt interest received during the year over the amortized bond premium for the year). Yes, you can enter Tax-exempt interest and Specified private activity bond in form 1099- Div. What should I enter in the Type Code field in the interest and dividends statements? How do I enter income from a private activity bond? How do I enter income that is tax-exempt at the federal level, but taxable at the state level?Box 11 is the bond premium. Is the line 8 amount already "adjusted" for the line 13 amount, or is the interest I sh. Instead the amortization amount is just showing in the 1099 in the. Follow these steps to make a manual adjustment for the bond premium you paid on your tax-exempt and taxable bonds: Select Federal Taxes Under Wages &. This has been very helpful. A. The amortization amount taken for federal income tax purposes must be added back on Line 3 of PA-40 Schedule A, Interest Income, while the Pennsylvania amortization amount is. Level 7. itonewbie. As of November 13, 2023, the fund has assets totaling almost $16. Box 14: Tax-exempt and tax credit bond CUSIP. For a taxable covered security acquired at a premium, unless you notified the payer in writing in accordance with Regulations section 1. Page 3 of 8 * This is important tax information and is being furnished to the Internal Revenue Service. In line 18 - (13) Bond premium on tax-exempt bond, enter the amount (if applicable). The premium paid for a bond represents part of the cost basis of the bond, and so can be tax-deductible, at a rate spread out (amortized) over the bond’s lifespan. The IRS says: "For bonds issued after September 27, 1985, you must amortize bond premium using a constant yield method on the basis of the bond's yield to maturity, determined by using the bond's basis and compounding at the close of each accrual period. Box 4 - Federal income tax withheld. This amortized amount is not deductible in determining taxable income. That percentage varies from year to year. 14. 06 and bond premium is $1. If your client needs to file Form 1116 see the following article: Amortizable bond premium on tax-exempt bonds. I. 42%. 2. If you disposed of the obligation or acquired it from another. If you receive income from bonds or other obligations that are exempt from Illinois Income Tax, the exempt amount you are entitled to claim is the interest net of bond premium amortization. 00 11- Specified private activity bond interest dividends (AMT) 0. Scroll down to the Tax-exempt interest subsection. 171–1, the amount of bond premium is $10,000 ($110,000−$100,000). The second de minimis rule is the De Minimis Market Discount Rule, which only indirectly applies to OID bonds, but has significant effects, particularlyReporting interest and bond premium. B&D Interest Income State ID No. This is the difference between the redemption price ($100) and the issue price that would produce a YTM of 10% (0. (2) Taxable bonds. 10. See Publication 1212 if this applies for instructions on how to calculate the taxable portion. Report the bond’s interest on Schedule B ( Form 1040A or 1040 ), line 1. Calculate the return. In general, see how to report tax-exempt interest in the Instructions forwithholding. For a specified private activity bond with OID, report the tax-exempt OID in box 11 on Form 1099-OID and the tax-exempt stated interest in boxes 8 and 9 on Form 1099-INT. See the instructions above for a tax-exempt covered security acquired at a premium. The same principle applies to Nominee. Box 13 – 15. This amount is listed in Box 11 for corporate bonds, while Box 12 includes such amounts for Treasuries and Box 13 has tax-exempt bond premium amounts. A comprehensive Federal, State & International tax resource that you can trust to provide you with answers to your most important tax questions. Min. Then, figure out how many months are left before the bond matures and divide the bond premium by the number of months remaining. TaxWise calculates this amount to Form 6251. What should I do with this?(Amortized Bond Premium). Municipal Bond Acquisition Premium. Under your last entry on line 1, put a subtotal of all interest listed on line 1. (Sections 612(c) (1) and (c) (2) of the. The last three. If you acquired a tax-exempt bond at a premium, you are only required to report the net amount of tax-exempt interest (that is, the excess of the tax-exempt. If these bonds were originally issued at a discount before September 4, 1982, or you acquired them before March 2, 1984, treat your part of OID as tax-exempt interest. The discount is taxable interest over the life of the bond, which gets reported every year you hold the bond, even if you don't actually receive any interest. You choose to use annual accrual periods ending on February 1 of each year. C. 00 8- Cash liquidation distributions 0. State identification no. In line 18 - (13) Bond premium on tax-exempt bond, enter the amount (if applicable). It also required that municipal bonds must meetVanguard's $199 billion municipal bond lineup includes a wide range of actively managed national, state-based, high-yield, and money market funds, as well as the $20. Bond premium Bond premium on Treasury obligations Bond premium on tax-exempt bond Tax-exempt and tax credit bond CUSIP no. Is the line 8 amount already "adjusted" for the line 13 amount, or is the interest I sh. of interest income. What should I do with this? A muni bond was also sold, 1099-B reports same amount as cost basis $10,000 and sales price of $10,000. There are three entries block 7 the description (name), box 11 Tax exempt OID ($3700) and block 6 acquisition premium ($790). Bond premiums on tax exempt are not adjusted at the federal level. (iii) Bond premium allocable to the first accrual period. tax-exempt bonds and, if a tax-exempt OID bond purchased at the issue price in the initial offering is held to maturity, any OID associated with the bond would be treated as tax-exempt interest. Click Change how i enter my form. Tax Exempt Bonds. UltraTax CS TL 32075 Form Field Name Not Shared . Since rates appear to be plateauing, longer-term funds might be better located in bond funds with longer durations. Acq. 171–2(a)(1) through (a)(4)(i)(B). In 2015, less than 1% of corporate bonds, 17% of taxable municipal bonds, and 1% of US. We've launched a new fund to expand our tax-exempt bond ETF (exchange-traded fund) lineup. Private Activity Bond - PAB: Tax-exempt bonds issued by or on behalf of local or state government for the purpose of providing special financing benefits for qualified projects. Under § 1. If the bond yields tax-exempt interest, you must amortize the premium. (ii) Tax-exempt obligations. Learn more about mutual funds at fidelity. You must also enter the letter E in the NAEOB column and the exempt amount in the NAEOB Amount column. Prior to amendment, subpar. When the loss is amortized in this way, that amount is reported here. The TIC for the most recent tax-exempt bond sale on June 8, 2022, was. For purposes of the restrictions against federal guarantees of tax-exempt bonds under § 149(b), a Build America Bond is not treated as federally guaranteed by reason of the credit allowed under § 54AA(a) or § 6431. In the 1954 Code, only IRC § 103 dealt with qualification requirements for municipal bonds of all types. Note that the tax on OID is paid annually, but the value is needed to determine your basis and the amount of market discount. Straight line or constant yield. Invests primarily in high-quality municipal securities. S. However, TurboTax will carry your entry from Box 11 in the Dividends on 1099-DIV section to this line automatically. Y. The remaining discount is treated as OID on a taxable bond. So if you paid $50 of accrued interest when you bought Bond 1, and $100 when you bought Bond 2, and you collected $130 on Bond 1 and nothing on Bond 2, you get to deduct the $50 paid (because 50<130) and carry the rest forward (because 100>0). 66 $165,865 $30,097have identical pre-tax and post-tax cash flows. 04 How to Choose a Bond Financing Structure 13(ii) Tax-exempt obligations. If you are required to file a return, a negligence penalty or other. 44 of bond premium on May 1, 2000, and $3,551. tax-exempt interest received during the year over the amortized bond premium for the year). 00. Error: Schedule M1M - sum of line 1 & line 2 doesn't match Form 1040 line 2a. However, if you acquired a tax-exempt bond at a premium, only report the net amount of tax-exempt interest on line 2a of your Form 1040 or 1040-SR (that is, the excess of the tax-exempt interest received during the year over the amortized bond premium for the year). California Code, Revenue and Taxation Code - RTC § 24363. A new box 13 has been added to Form 1099-INT to report bond premium on tax-exempt bonds. Bond Premium on Tax-Exempt Bond, later. For a taxable covered security acquired at a premium, unless you notified the payer in writing in accordance with Regulations section 1. Subtract this amount from the subtotal, and enter the result on line 2. (iii) Bond premium allocable to the first accrual period. Ultra Short Bond Fund - the Advisor has contractually agreed to waive management fees in an amount equal to an annual rate of 0. Fidelity Learn. 25%. The above tells us to reduce tax-exempt income by the Box 10 amount. Management Swap at Vanguard Ultra Short-Term Tax-Exempt; Ratings Unchanged. At closing, bond counsel delivers an opinion that interest on theTaxable Bond: A debt security whose return to the investor is subject to taxes at the local, state or federal level, or some combination thereof. Tax-Exempt OID (Box 11) is offset by Acq Premium (Box 6); they are both adjustments to tax exempt income and are not taxable. For each year that the premium is amortized, Janice’s cost basis (the $1,030) is reduced by the annual $10 amortization under IRC § 1016 (a) (5) and reflected by the broker as well under Treas. In other words, a bond having a par value (redemp-tion value at maturity) of $1,000 would be purchased for. I don't see any place on the Additional Information Worksheet that indicates a place to put "Noncovered Bond Premium on Tax-Exempt Bonds" nor for "Muni. Bond premium on Treasury obligations $ 13 . In Box 88 - State, enter XX. However, in conduit financings, the bond documents usually delegate most responsibilities to maintain the tax-exempt status of the bonds to the Borrower. amount of bond premium amortization for the tax year. Investors need to understand the potential taxThis was $350 million in new tax-exempt bonds and $50 million in new taxable bonds. Nov 18,. There are 3 NYS bonds. Select visit all on the line Forms 1099-INT, 1099-DIV, 1099-OID. The phase-out threshold is $1,079,800 for 2022 for married filing jointly. 82%. 00 Tax-exempt private activity obligations (AMT, covered lots) 0. Vanguard Short-Term Tax. When you purchase a bond or note at a discount, you'll get Form 1099-OID (Original Issue Discount). But even though no deduction is allowed, tax-exempt bonds still must amortize the premium on the books under IRC. At least, that's how it's handled for tax-exempt Muni Bonds. S. Where and how do I record this. Check it out. The $25,000 of interest income on state and local bonds, other than the New York City bonds, is to be added to Federal adjusted gross income (see subdivision [a] of this section). See the Instructions for Form 6251. - Market discount (noncovered lots) 0. Example of Premium Bond Amortization. Instead the amortization amount is just showing in the 1099 in the "Adjustments" section, under "Bond premium - Tax-exempt obligations (noncovered. S. Status Open. tax-exempt Bond with bond premium must amortize the premium over the term of the Bond, reducing the basis in the Bond by such amortization. TurboTax Online. State tax withheld $ $ 2021. The New Jersey return asks what portion is tax exempt (due to federal or New Jersey obligations). If there's an amount in box 11. 50% would drop to roughly 2. You are required to amortize the premium each year and this will reduce your basis (what you paid). Specified Private Activity Bond Interest — Shows tax-exempt interest subject to the alternative minimum tax. When To File File Form 8038 by the 15th day of the 2nd calendar month after the close of the calendar quarter in which the bond was issued. Municipal bonds are typically issued with an optional redemption date or “call date” (i. HOMEForm 8949. 744 & 745) E E Production Credit Associations E E Puerto Rico E E Puerto Rico Water Resources — 4. This amount reduces taxable interest and is notated "ABP Adjustment" on Schedule B. Under your last entry on line 1, put a subtotal of all interest listed on line 1. For a tax-exempt covered security acquired at a premium, see Box 13. Include in box 8 any accrued qualified stated interest on these bonds sold between interest dates (or on a payment date). Make a note for next year's file. That is, a bond issued at a discount might. bonds will be offered and traded at a “discount. The federal return asks if any portion was from US Government Interest. In Box 110 - Additional amount, right-click on the box and select List . When sold for more of the face value, they are sold with a premium; when less than face value, a discount. How to report acquisition premium on tax exempt bonds. § 1. Client has 1099-Int and within the paperwork there is an amount for "Noncovered Bond Premium on Tax-Exempt Bond" and an amount for Welcome back! Ask questions, get answers, and join our large community of tax professionals. The new ETF will complement our existing actively managed limited-term and ultra-short-term tax-exempt. 00 5- Investment expenses 0. 0745% compounded annually. 03-31-2023, 08:59 AM. For example, a bond with a $1,000 face value may be sold for $900. I also have the same issue with my 1099-INT where my bond premium (box 11) is greater than interest income (box 1). However, if the. 1099 from bond funds and tax exempt amount. Because bond premium amortization is mandatory for tax-exempt Bonds, a Bond holder who has acquired a tax-exempt Bond with bond premium must amortize the premium. how do I report these in Federal Tax?. 68 of. This amount reduces taxable interest and is notated. Most interest that you either receive or is credited to an account that you can withdraw without penalty is taxable income in the year it becomes available to you. 00 8- Cash liquidation distributions 0. This limitation on tax-exempt OID ensuresThe amortization of a bond premium on a tax-exempt bond is the excess on its face value or the premium and part of the premium can be deducted from the interests. Under Wages & Income select I nterest on 1099-INT. Enter on 1099-INT worksheet, Box 1 - Interest income. Per the IRS Instructions for Form 1099-INT - - Box 14. CT modifies federal AGI by adding tax exempt interest to federal AGI. (March 27, 2023) As part of ongoing efforts to improve service for the tax-advantaged bond community, the IRS accepts electronic filing of Form 8038-CP, Return for Credit. *. For Muni bonds, any Premium amortization (for any premium you paid, other than the accrued interest) will be reported in box 13 _____*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice. Note: The net amount will appear in Box 110 and will flow to the state return. 00 7- Foreign country or US possession: 6- Foreign tax paid: 0. The reissuance rules apply to all tax-exempt bonds from a large bond issue to a small. So when the bond matures, your basis will be the face value of the bond. Tax-Exempt Interest Received by Estate or Trust. That is, a bond issued at a discount might be trading at a premium price (above par) on the bond exchange. Municipal bonds have a face value. The firm will publicly name Lee Chu as a portfolio manager at. While municipal bonds are available in both taxable and tax-exempt formats, the tax-exempt bonds tend to get the most attention because the income they generate is, for. See the instructions above for a tax-exempt covered security acquired at a premium. Also, if you acquired a tax-exempt OID bond at an acquisition premium, only report the net amount of tax-exempt OID on line 2a (that is, the excess of tax-exempt OID for the year over the amortized acquisition premium for the year). By contrast, premium bonds are rarely offered in the taxable market. The following table indicates the reduction in “cost of securities sold” which Y should make for the years shown, assuming that. Maintains a dollar-weighted average maturity of 1 to 2 years. Where do I report this and also the acquisition premium amortization? TurboTax Deluxe. 113–295, § 221(a)(29)(A), amended subpar. The premium paid for a bond represents part of the cost basis of the bond, and so can be tax-deductible, at a rate spread out (amortized) over the bond’s lifespan. 16 . The same principle applies to Nominee. Adjustments can be entered in Adjustments, Screen 40. Are bond premiums taxable? For a bond investor, the. In fine print is says "original cost basis $10,368". 00 7- Foreign country or US possession: 6- Foreign tax paid: 0. Let us consider an investor that purchased a bond for $20,500. The bond’s maturity period is 10 years, and the face value is $20,000. B. PHONE: 800-955-2444 CONNECT: Tax Analysts is a tax publisher and does not provide tax advice or preparation services. 1099-OID. 42%. (ii) Amount of bond issuance premium. If you are required to file a return, a negligence penalty or other. 17 . ) Loans of $10,000 or less between individuals who are not in the. 67. Taxable OID, tax-exempt OID and bond premium are reported on Form 1099-OID like yours. 70 years. Once information is completed, Lacerte generates an election statement with the election language and bond information. Specified private activity bond interest $ 10 . I have a form 1099-INT that lists tax exempt interest on line 8 and bond premium on tax exempt bonds on line 13. For a private activity bond to be tax-exempt, 95% or more of the net. • Line 11: Bond Premium – Shows the total amount of bond premium for taxable obligations. *Panama Canal Bonds Specifically Exempt from Tax by U. In a simplified example, if you buy a five-year bond with a 6% coupon at a price of 105, and amortize one point of premium a year for the five years, then each year you can deduct $10 of the $60. Original issue discount (OID) is a form of interest. Referenced Sources: Massachusetts General Laws. Nov 18, 2020. Since the coupon rate is paid semi-annually, it means that every six months, a coupon of $25 ($1,000 x 5/2) will. For a tax-exempt covered security acquired at a premium, box 13 shows the amount of bond premium amortization allocable to the interest paid during the tax year. tax-exempt Bond with bond premium must. Box 13 Bond Premium on Tax-Exempt Bond: $64. If the bond yields tax-exempt interest, the taxpayer must amortize the premium. To enter exempt interest dividend and specified private activity in Turbo Tax: Also, if you acquired a tax-exempt OID bond at an acquisition premium, only report the net amount of tax-exempt OID on line 2a (that is, the excess of tax-exempt OID for the year over the amortized acquisition premium for the year). Because discount bonds are sold below face value, it is expected. I have a 1099 with box 8 tax-exempt interest and box 13 bond premium on tax exempt bonds. The result is $1,775. Amortizable bond premium is a tax term referring to the excess premium paid over and above the face value of a bond. This premium is due to the fact that the bond is paying a higher interest rate than the stated rate for similar bonds. 04-02-2021 10:50 PM. §1. The amount entered as Amortizable bond premium on tax exempt - which reduces the amount of tax exempt interest on the federal return, however the add back for NYS is the full amount. The bond pays out interest, but loses $368 of value during the holding period. VTES predominantly invests in short-term investment-grade municipal bonds and will track the S&P 0-7 Year National AMT-Free Municipal Bond Index. 22-Sep-2019 6:06am. The U. However, at year-end, the purchaser will receive a Form 1099-INT Interest Income showing the total interest received. C. e. If these are private activity bonds, you'd have a number in Box 9 that would be added back as a TPI on F. 2 or $253,000. (or it was called): Your cost basis at the date of sale is determined by the yield to maturity method.