Corporate Bonds

How does the IRS treat the interest I receive on a corporate bond?

The interest you receive while you hold a corporate bond sold before it matures is subject to federal income taxes. As long as the bond is held up to a year from the time of purchase, it is taxed at your ordinary income tax rate. If it is held for longer than one year, it is taxed at the current long-term capital gains rate. If you sell a bond at a loss, you may use this loss to offset gains made by other investments. Depending on the size of the loss, you may deduct the loss during that reporting year, or carry over the loss to subsequent reporting years. For additional information, please consult a tax professional.


This is a web preview of the "The Handy Investing Answer Book" app. Many features only work on your mobile device. If you like what you see, we hope you will consider buying. Get the App