Tax Facts

7663 / How is gain or loss taxed on sale or redemption of tax-exempt bonds issued by a state or local government?

The seller may recover an amount equal to the seller’s adjusted basis tax-free. If the bond was purchased at a premium, the seller’s basis for determining gain or loss is adjusted to reflect the amortization of the premium (see Q 7664).

With respect to a bond both issued after September 3, 1982, and ...

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