Tax Consequences of Tax-Exempt Bonds
This survey is intended to inform investors about problems related to investment in 'tax-free' municipal bonds. Relevant topics are: indirect federal income taxes, taxation of Social Security benefits, capital gains and losses, bond premiums, bond discounts, worthlessness, entities and their owners, individual retirement accounts, adjustments to basis in S corporation stock, adjustments to basis in partnership interest, funding a charitable lead trust, the accumulated earnings tax, estate and gift taxes, state and local taxes, and triple exemption. Various states in the United States tax municipal bonds differently. Full knowledge of tax provisions must be obtained before tax-exempt municipal bond investment.
Publication Name: Taxes: The Tax Magazine
U.S. EE savings bonds: still crazy after all these years
The EE savings bond has been promoted as a good savings vehicle for low-income investors, and many people use them because of the convenience of automatic payroll purchasing and deferred taxation of interest. However, for individuals in the 15% and even in the 28% tax brackets, the savings bonds are not a good investment for either retirement or college savings, the two most common uses. The government would have to raise the interest rate to 100% of the 5-year treasury security yield to make the EE series a worthwhile investment.
Publication Name: Journal of the American Society of CLU & ChFC
Do tax-free municipal bonds sometimes pack a taxable surprise for high-net-worth investors?
Investors and their financial advisors should carefully assess the long-term tax advantages of tax-exempt municipal bond investments. After-tax return rates should be compared with those for other long-term investments. Current increases in taxation of Social Security benefits may occur due to the inclusion of bond interest in the calculation for modified adjusted gross income. The tax consequences of premium and discount purchases should also be taken into account.
Publication Name: Journal of Taxation of Investments
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