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That sensitivity to interest rates is even higher with zero-coupon bonds, where the payout comes at the end of the bond’s life instead of the regular payments offered by short-term bonds. Taxes ...
Zero coupon bonds have a duration equal to the bond's time to maturity, which makes them sensitive to any changes in the interest rates. Investment banks or dealers may separate coupons from the principal of coupon bonds, which is known as the residue, so that different investors may receive the principal and each of the coupon payments.
These rules prevent the avoidance of tax that might otherwise be available by characterizing the repayment as a capital gain, which is taxed at a lower rate, or by deferring the recognition of income until the bond is repaid at maturity. There are a number of exceptions to the original issue discount rule, including: Tax exempt obligations
Named after its legislative sponsors, the Marks-Roos Local Bond Pooling Act (California Government Code §6584-6599.1) is a law enacted by the California Legislature in 1985. [ 1 ] [ 2 ] The main purpose of this statute is to allow local California governments to work together to get financing in a way that will conceivably lower borrowing costs.
In many cases, it could make sense to go with a lower-yielding tax-free bond than a high-yielding traditional bond, because the after-tax yield on the muni bond is ultimately higher.
According to this rule, if the discount at which a bond is purchased in the secondary market is less than 0.25% of the face value for each full year from the purchase date to the bond’s maturity ...
Most city and county bonds require voter approval in California, needing the support of at least two-thirds of voters to pass. [3] This requirement was put in place by Proposition 13 which was passed in 1978 and reduced property taxes. [4] In 2000, Proposition 39 reduced the supermajority to 55% to approve taxes for local school bonds. [4]
An I bond is a savings bond that earns two returns: a fixed interest rate and a variable inflation rate. New owners may wonder: Do I pay taxes on I bonds? The answer in most cases is yes, but...