Early withdrawal penalties on certificates of deposit are a special type of tax-deductible expense. Like IRA contributions, alimony, and a few other items, these penalties are deductions from your total income and are used to calculate your adjusted gross income. Continue reading
Monthly Archives: January 2012
Describing the Bonds You Sell
Describing the bonds you sell is easy as long as you have the necessary information: the number of bonds sold, the price per share (or the transaction total), and the commission paid (if any). You also need to know the amount of accrued interest you will be paid. As with other investment transactions, you can record bond sales either directly into the register or by using an investment form; using an investment form is easier. Continue reading
Recording Accrued Interest Shown on a 1099-OID Part (2)
· Click the Easy Actions menu, click Return Of Capital, and then fill in the Return Of Capital dialog box. Describe the accrued but unpaid interest as a negative return of capital. (This is the same technique used earlier to deal with accrued interest paid with a bond purchase.) Continue reading
Recording Accrued Interest Shown on a 1099-OID
You aren’t always paid the interest that you’ve earned. If you purchase a negotiable certificate of deposit (CD), for example, the bank issuing the CD may accrue the interest you’ve earned through the end of the year and then add this amount to the CD’s value. If you purchase a zero-coupon bond, you don’t receive periodic interest payments at all. Rather, the bond issuer accrues interest each year and then repays the bond and the total accrued interest at maturity Continue reading
Describing Bond Interest and Return of Capital
Distributions Most bonds pay monthly or semiannual interest. In addition, some bonds—for example, mortgage-backed securities such as GNMA bonds—return a portion of the bond principal with each interest payment. Continue reading