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Washington Tax Alert - May 23, 2008 - Market discount bonds
Washington Tax Alert from Don Barnes, dbarnes@washingtontaxlaw.com Financial institutions and investors are acquiring bonds, loans and other debt obligations at discounted prices. Typically, these debt instruments have declined in value because the debtor's creditworthiness has deteriorated. Market discount exists if the taxpayer acquires a debt instrument for an amount less than the principal amount of the debt instrument payable at maturity. The financial accounting rules for including market discount in income are different from the tax rules, which are set forth in IRC §§ 1276-1278. Taxpayers and their CPA firms should be aware of this difference and the possibility of making an accounting method change for tax purposes. Law Offices of Donald A. Barnes, PLLC The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. |  |         |