InstantForum.NET v4.1.4California Society of CPAshttp://forums.calcpa.org/forums@calcpa.orgWed, 16 May 2012 17:38:17 GMT20http://forums.calcpa.org/Topic116-2-1.aspxlooking at code section 171(a) and (b) i don't see the word "paid" <br><br>btw, since you didn't log in or sign your posting, you are "anonymous" <br><br>billFri, 29 Sep 2006 11:26:12 GMTBillhttp://forums.calcpa.org/Topic116-2-1.aspx[quote][b]Mary Kay Foss (3/19/2006)[/b][hr]I disagree. I believe that the *step up* in basis is treated as a purchase at the date of death. If you hold the bonds to maturity, amortization is required. If the bonds are sold before maturity there will be some loss due to the unamortized premium.[/quote]<br><br>Just to add a bit to Mary Kay's comment: Code section 171(a)(2) has the general rule requiring amortization of premium for tax-exempt bonds. There is no exception for inherited bonds. If you hold bonds to maturity, there would be no taxable gain or loss. If you sell before maturity, there would be a gain or a loss, depending on whether the proceeds are more or less than the amortized basis of the bond. <br><br>For fiduciary accounting purposes, there is a loss when the bonds mature. That's for accounting purposes, not for tax purposes.<br><br>If you have any bonds at discount, those will be treated very differently for tax purposes.<br><br>bill downs<br><br><br>Mon, 20 Mar 2006 09:12:20 GMTBillhttp://forums.calcpa.org/Topic116-2-1.aspxI disagree. I believe that the *step up* in basis is treated as a purchase at the date of death. If you hold the bonds to maturity, amortization is required. If the bonds are sold before maturity there will be some loss due to the unamortized premium.Sun, 19 Mar 2006 12:15:08 GMTMary Kay Foss