The additional bond premium eventually brings down the effective yield to the market prevailing rate. (investopedia.com)
After that, it is your basis decreased by the amount of bond premium amortized for earlier periods and the amount of any payment previously made on the bond other than a payment of qualified stated interest. (toolsformoney.com)
These sheets calculate the (annual) figures for: • Accrued interest that needs to be returned to the seller after settlement • Net bond basis • Original discount or premium • Annual (pro-rated) amortization of bond premium using both Constant Yield and Straight Line amortization, as required by the IRS • End - of - year basis • Annual coupons • Estimates of taxes due on coupons • Estimates of differences in taxes paid vs. not amortizing premiums • Capital loss or gain upon sale before maturity (toolsformoney.com)