7675 / How is an individual taxed if the corpus or coupons of a taxable bond are sold and the corpus or coupons and bond were originally acquired as a unit before July 1, 1982?

A taxpayer who stripped bonds and then sold the bonds and retained the detached coupon properly allocated his or her entire basis to the stripped bonds and was not required, for purposes of determining loss, to allocate basis between the coupons detached and retained and the stripped bonds sold (as is required for transactions occurring after July 1, 1982).¹ However, the taxpayer was required to treat the coupon as a right to interest, so that on sale or redemption of the coupons, the entire proceeds would have been characterized as interest.²

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1. TAM 8602006.

2. Rev. Rul. 58-275, 1958-1 CB 22.