You may also be taxed on gains characterized as market
discount at your ordinary income rate.
Not exact matches
In addition, you may be subject to tax on amounts recognized in connection with the sale of municipal bonds, including capital gains and «market
discount» taxed
at ordinary income rates.
You may also be subject to tax on amounts recognized in connection with the sale of municipal bonds, including capital gains and «market
discount» taxed
at ordinary income rates.
So it appears that if, in my example above, the taxpayer exercises his option to buy a $ 60 stock for $ 40, that $ 20
discount will be taxed
at ordinary income rates if he immediately sells the stock.
In general, the effect of the election is to slightly decrease the
rate at which the market
discount is deemed to accrue, which will generally produce a beneficial result for the bondholder by reducing the amount of
ordinary income recognized on a sale of the bond prior to maturity.