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- Title
In the Age of a 3.8 Percent Net Investment Income Tax, It's Still Advisable to Amortize Bond Premiums.
- Authors
Witner, Larry; Gainor, MaryElla
- Abstract
Before 2013, high-income investors paid income tax rates of 33 percent and 35 percent on the interest from corporate bonds. Given these tax rates, when taxpayers purchased corporate bonds at a premium, it was advisable to amortize the premium. Beginning in 2013, high-income investors are also subject to a Net Investment Income Tax (NIIT). Should they still amortize a premium? This article summarizes NIIT, presents bond premium amortization requirements, and considers a hypothetical high-income investor. The model presented concludes that it is advisable to amortize the premium.
- Publication
Journal of Taxation of Investments, 2014, Vol 31, Issue 2, p31
- ISSN
0747-9115
- Publication type
Academic Journal