Client has CA muni bond with tax exempt interest but also a bond premium reported in box 13. If that option is not exercised by the issuer, taxable loan stays in place and is subject to a make-whole call – If issuer opts to issue tax exempt bonds, lender can accept or reject – If lender rejects the tax exempt bond option, it will instead pay aThe following includes answers to common questions about interest, dividends, and tax-exempt income. The amounts from box 6 and 7 are used to generate a Foreign Tax Credit. Box 12 of the Form 1099-DIV shows your tax-exempt income dividends. But, Turbo Tax is only adding the excess of tax exempt interest over bond premium on tax exempt bonds (similar to the calculation on line 2a of Form 1040) to federal AGI to arrive at CT AGI. If you are required to file a return, a negligence penalty or other. This amount is included in line 8. § 171 (b) (1) (C) —. Follow these steps to make a manual adjustment for the bond premium you paid on your tax-exempt and taxable bonds: Select Federal Taxes Under Wages &. 12-06-2019 04:38 PM. ” An investor buys a bond at a discount when the dollar price paid is below the stated face value of $100. Under applicable tax rules, the Issuer is legally responsible for the tax-exempt status of the bonds. Form 1099-OID, Original Issue Discount, exists to report income when bonds, notes, or certificates of deposit (CDs) are sold at a discount from their maturity value. on my 1099-Int: Box 8 Tax-Exempt Interest: $544. A NY resident with NY income in excess of $1,000,000 purchases a 5-year $100,000 Washington state tax-exempt bond with a 3% coupon for $105,000 since market conditions dictate a 2% yield on this bond. When To File File Form 8038 by the 15th day of the 2nd calendar month after the close of the calendar quarter in which the bond was issued. The interest payments on the bond are qualified stated interest. Investment Policies, local or state investment restrictions, legal requirements such as the arbitrage yield permitted under federal tax rules, limitations in bond indentures or bond ordinances, requirements from bond covenants and/or credit enhancement. Bond premium on Treasury obligations $ 13 . Tax-exempt interest $ 9 . For a covered security acquired with bond premium, you must report the amount of bond premium amortization for the tax year. Enter the state that pays your tax-exempt. Bond premiums on tax exempt are not adjusted at the federal level. Treasury obligation and is exempt from state and local income taxes. Line 2 State, enter another state or XX; Line 3 Additional Tax Exempt Interest dividends, enter the portion that is taxable to the state from Box 11; Calculate the return. Form 8038-CP - Availability of Electronic Filing; Mandatory Electronic Filing for Certain Filers in 2024. However, if you acquired a tax-exempt bond at a premium, only report the net amount of tax-exempt interest on line 2a of your Form 1040 or 1040-SR (that is, the excess of the tax-exempt interest received during the year over the amortized bond premium for the year). IRC § 103 does not mention governmental bonds, but it does refer to. Acq. (3) Bonds the interest on which is partially excludable. So if you did report it, it would be on Schedule B (which the Sch B totals carry over to the front page of the 1040). In 2015, less than 1% of corporate bonds, 17% of taxable municipal bonds, and 1% of US. 03-06-2023, 09:01 PM. When bonds are purchased at a premium (greater than $1,000 per bond), a prorated portion of the amount over par can be deducted annually on the purchaser's tax return. Go to Interest and Dividend Income. Any exempt-interest dividends from a mutual fund or other RIC are reported on Form 1099-DIV. Both will achieve the same result. When sold for more of the face value, they are sold with a premium; when less than face value, a discount. You can delete Schedule B using these steps: Select Tax Tools from the menu on the left. Maintains a dollar-weighted average maturity of 1 to 2 years. following rules shall apply to the amortizable bond premium (determined under subsection (b)) on the bond: (1) Taxable bonds. 00 Bond premium- Tax-exempt obligations (AMT, noncovered lots) 0. your basis at the call date after amortizing the premium using the yield to call. Several TurboTax users have noted that TurboTax claims that Charles Schwab 1099-OID’s for tax-exempt bonds with a positive bond premium in Box 10 must have Box 10 manually reduced to 0 because Schwab provides no Box 2 value and it is treated as being null (0). If adjustments for bond premiums are not reflected on your 1099-INT, you can manually enter the bond premium adjustment in the 1099-INT section of TurboTax. Reporting interest and bond premium. 10) ($82. Effective Duration 8. It has four check boxes. (If the bonds are tax-exempt bonds, any such. linduca1216. bonds will be offered and traded at a “discount. Treasury Obligations shows the bond premium for the year for covered U. Market discount $ 11 . 77: Discount: 4%: 2%: $2: $102: $96. This amortized amount is not deductible in determining taxable income. bond that is treated as tax-exempt interest to the discount that produces a yield to maturity equal to the coupon rate of interest on (or, at the purchaser’s election, the original yield to maturity of) the whole tax-exempt bond. 800%/$107. A percentage of the income is exempt from state income tax. tax-exempt Bond with bond premium must amortize. S. To. A. For example, if 100 bonds are. (ii) Amount of bond premium. However, in the case of a taxable bond, if you have been How to report acquisition premium on tax exempt bonds. Where do I enter bond premium non treasury obligations noncovered. If you bought a TAX-EXEMPT bond at a PREMIUM and sold it PRIOR to maturity. 52 in 2009. On the 1099-INT box 13 has an amount of $ 13,833 of which all is under "Tax-exempt obligations (covered lots)". S. Market discount on a tax-exempt bond is not tax exempt. It usually occurs when companies issue bonds at a price less than their redemption value at maturity. Tax-exempt interest $ 9 . 02-17-2020 09:00 AM. Referenced Sources: Massachusetts General Laws. • Qualified 501(c)(3) bonds. 22:. Vanguard Short-Term Tax-Exempt Bond ETF (VTES) is built to help you earn consistent, tax-exempt income. 1, 2023. There is also $12,343 of bond premium on tax exempt bonds on line 13. A tax term, the amortizable bond premium refers to the excess price (the premium) paid for a bond, over and above its face value. Category Muni National Long. 171–2(c) Example 4. 00 14-Tax-exempt and tax credit bond CUSIP number ORIGINAL ISSUE DISCOUNT AND. to you on Form 1099 each year since you bought the bond. If these bonds were originally issued at a discount before September 4, 1982, or you acquired them before March 2, 1984, treat your part of OID as tax-exempt interest. 6 percent bracket). 171–4 for rules relating to the election to amortize bond premium on a taxable bond. For purposes of preparing the state (Calif) return I should be able to reduce the interest income on the out of state bonds by the amortized bond premium attributable to such bonds. What if I have income from obligationsAn individual who received $421 in interest from bonds issued by another state and purchased after December 31, 2011, will have to “add back” $421 to the amount of income used to calculate the tax obligation for Indiana. If tax. At least, that's how it's handled for tax-exempt Muni Bonds. Learn more. “Vanguard Short-Term Tax-Exempt Bond ETF is built to optimize tax efficiency for investors seeking to. The U. Municipal Bond Acquisition Premium. This is the difference between the redemption price ($100) and the issue price that would produce a YTM of 10% (0. To enter exempt interest dividend and specified private activity in Turbo. box 2 is tax-exempt interest and is not included in interest income on your tax return. 17 . Below this subtotal, print “ABP Adjustment,” and the total interest you received. Under § 1. The adjustment will reduce your amount of reportable tax-exempt interest on Form 1040, line 8b. Accordingly, the first step in our analysis is to usepairs of. This amount is listed in Box 11 for corporate bonds, while Box 12 includes such amounts for Treasuries and Box 13 has tax-exempt bond premium amounts. Yes, you can enter Tax-exempt interest and Specified private activity bond in form 1099- Div. 00 11- Specified private activity bond interest dividends (AMT) 0. In fine print is says "original cost basis $10,368". See Publication 550. If you are required to file a return, a negligence penalty or other. 5% to an investor in a 25% tax bracket, or a 3. 000% Dated Date: 8/31/20 Maturity Date: 4/01/27 Issue Yield/Price: 0. Tax-exempt bond. Tax-exempt obligations. 9. The Bloomberg Municipal Bond Index is a rules-based, market-value-weighted index engineered for the long term tax-exempt bond market. Box 12 refers specifically to the bond premium on U. Nov 18, 2020. If adjustments for bond premiums are not reflected on your 1099-INT, you can manually enter the bond premium adjustment in the 1099-INT section of TurboTax. 1272-2(a):To report this on your tax return, you can follow these steps: Enter the Tax Exempt OID ($3700) on Form 1040, Line 2a as tax-exempt interest. If the Tax-exempt income is coming from a Passthrough it is entered in Passthrough K-1's, Screen 23. (iii) Bond premium allocable to the first accrual period. 9. The 2017 tax law increased the phase-out thresholds for AMT meaning fewer filers will be subject to AMT under the new tax laws. The interest income from taxable bonds is subject to federal, state (and local, if applicable) income taxes. If you receive income from bonds or other obligations that are exempt from Illinois Income Tax, the exempt amount you are entitled to claim is the interest net of bond premium amortization. State. The second de minimis rule is the De Minimis Market Discount Rule, which only indirectly applies to OID bonds, but has significant effects, particularlyReporting interest and bond premium. The bond premium allocable to the accrual period ending on February 1, 2000, is. In no case shall the amount of bond premium on a convertible bond include any amount. While still exempt from Federal Income Tax, such amounts will be reported to the Internal Revenue Service. 25% of permissible premium). or. 1099-OID. Therefore, the OID on tax-exempt bonds is tax free, while the OID on taxable securities is subject to taxation as interest income. Above those thresholds, up to 85% of your benefits could be taxed. See the Instructions for Form 6251, Alternative Minimum Tax for Individuals. Bond premium $ 12 . Is the line 8 amount already "adjusted" for the line 13 amount, or is the interest I sh. Your yield is 8. If half of your Social Security benefit plus other income, including tax-exempt muni bond interest, is between $32,000 and $44,000 for a joint tax return ($25,000 to $34,000 for single filers), up to 50% of your Social Security benefits may be taxable. This nondeductibility (and accompanying adjustment to basis) for tax-exempt bond premiums became Federal law in 1942. During the life of the bond, the premium amount is amortized and reduces the amount of t/e interest income received. 77: Discount: 4%: 2%: $2: $102: $96. 10. Initial Investment 3,000. Understanding the tax implications of your bond investments is crucial for effective. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines. TL 32075 Destinations of Shared Data from Source Data Entry: UltraTax CS(taxable, treasury, tax exempt, tax exempt subject to AMT) that represent the total amount reported in box 11 (bond premium). 07%. State. Inside addition, New Sweatshirt Problems about New IRS Bond Premium Amortization Rules ' s instructions intimate such amortizable premiums are excluded for that state ' sec mandatory add-back by statement, “When you total your interest income on Lines 15a and 15b, the amount must correspond the total of taxable and tax-exempt. See Regulations section 1. There is also an adjustment to tax-exempt interest that does not factor into the income distribution deduction. Calculate the return. Is the line 8 amount already "adjusted" for the line 13 amount, or is the interest I sh. If you make this choice, you must reduce your basis in the bond by the amortization for the year. This amount is listed in Box 11 for corporate bonds, while Box 12 includes such amounts for Treasuries and Box 13 has tax-exempt bond premium amounts. 00. Tax-Exempt OID (Box 11) is offset by Acq Premium (Box 6); they are both adjustments to tax exempt income and are not taxable. Tax-exempt income. The bond comes with five years until maturity and a par value of $1,000. (2) Tax-exempt. You have it backwards unfortunately. Because individual bonds and bond funds distribute income differently and treat your principal differently, there are also some differences in how that income and any capital gains are taxed. Interest derived from bonds issued by California or its political subdivisions, the federal government, the District of Columbia (issued before December 24, 1973), or territories of the United States. I can't do a manual adjustment as I'm doing a standard deduction, not itemized deduction. In the left-hand navigation, click. See line 4. whether the bond premium is de minimis (17 years times . This amount is included in line 8. 1. Tax-exempt and tax credit bond CUSIP no. of interest income. Original issue discount (OID) is a form of interest. The amortizable bond premium per month is $1 with respect to bonds D, E, and F, and is $. 7 Tax-exempt bonds typically have low and sometimes fixed interest rates and longer maturity periods (10- to 30-year terms) compared to taxable bonds. Tax Topic 403 - Interest Received. Instead the amortization amount is just showing in the 1099 in the. 171–1, the amount of bond premium is $10,000 ($110,000−$100,000). I can't do a manual adjustment as I'm doing a standard deduction, not itemized deduction. It is a municipal bond that matured and the premium was more than tax exempt amount. Error: Schedule M1M - sum of line 1 & line 2 doesn't match Form 1040 line 2a. A tax term, the amortizable bond premium refers to the excess price (the premium) paid for a bond, over and above its face value. A holder may elect to amortize bond premium on a taxable bond. Is the tax-exempt OID on the federal level reported on the tax. 6045-1(a)(15)(i)(C) to determine if a debt instrument is a covered security. For bonds issued after 1984, the OID is treated as interest. Client has 1099-Int and within the paperwork there is an amount for "Noncovered Bond Premium on Tax-Exempt Bond" and an amount for Welcome back! Ask questions, get answers, and join our large community of tax professionals. The premium must be amortized and subtracted from the OID interest. Enter on 1099-INT worksheet, Box 3b - Interest on Treasury obligations. Expenses (other than interest expense) connected with federally tax-exempt income that is taxable to New York State: X: X: X: X: S-204: Amortizable bond premiums on bonds that generate federally tax-exempt interest income that is taxable to New York State: X: X: X: X: S-205: Wage and salary expenses allowed as federal credits but not as federal. At closing, bond counsel delivers an opinion that interest on theTaxable Bond: A debt security whose return to the investor is subject to taxes at the local, state or federal level, or some combination thereof. The following includes answers to common questions about interest, dividends, and tax-exempt income. If adjustments for bond premiums are not reflected on your 1099-INT, you can manually enter the bond premium adjustment in the 1099-INT section of TurboTax. That process includes extensive fact-gathering and analysis by bond counsel to ensure that the bonds will be in compliance with federal tax law requirements. Learn more about mutual funds at fidelity. K. Go to Screen 46, Elections. Box 12 Bond Premium on U. withholding. Box 13 refers to the bond premium on tax-exempt bonds. However, at year-end, the purchaser will receive a Form 1099-INT Interest Income showing the total interest received. When the loss is amortized in this way, that amount is reported here. Bond Premium on tax-exempt bonds - 1099Hello,I am preparing a tax return for a client that has nothing but tax-exempt muni bonds in her portfolio. For young or lower income tax payers it is probably fine to. tax-exempt bonds and, if a tax-exempt OID bond purchased at the issue price in the initial offering is held to maturity, any OID associated with the bond would be treated as tax-exempt interest. The remaining 40 percent are taxed at your ordinary income. Enter the state that pays your tax-exempt. The result is $1,775. Refer to the screenshots below. The premium paid for a bond represents part of the cost basis of the bond, and so can be tax-deductible, at a rate spread out (amortized) over the bond’s lifespan. A factor that can greatly reduce the price volatility of bonds is the presence of. 03-06-2023, 09:01 PM. I can't do a manual adjustment as I'm doing a standard deduction, not itemized deduction. By contrast, premium bonds are rarely offered in the taxable market. The bond pays qualified stated interest of $10,000 on February 1 of each year. Savers are allowed to buy up to $5,000 of I Bonds directly if they're receiving a tax refund when they file their 2022 tax returns. posted. 8 billion Vanguard Tax-Exempt. Under your last entry on line 1, put a subtotal of all interest listed on line 1. To enter the bond premium in Turbo Tax, Go to Income. Subtract the bond premium amortization from your interest income from these bonds. The $20,000 of interest income on United States bonds is to be subtracted from Federal adjusted gross income (see section 112. 22-Sep-2019 6:06am. Tax-exempt state and local government bonds. 00 Tax-exempt private activity obligations (AMT, covered lots) 0. 50% would drop to roughly 2. With TurboTax Deluxe open. Specified Private Activity Bond Interest — Shows tax-exempt interest subject to the alternative minimum tax. April 11, 1980. Interest Income. Form 1099-OID, Original Issue Discount, exists to report income when bonds, notes, or certificates of deposit (CDs) are sold at a discount from their maturity value. The New Jersey return asks what portion is tax exempt (due to federal or New Jersey obligations). 15 State 16 State identification number 17 State tax withheld FATCA filing requirement . Premium: 4%: 6%: $6: $106: $103. Bond Age. It offers a 5% coupon rate that is paid semi-annually and with a yield to maturity of 3. To enter exempt interest dividend and specified private activity in Turbo Tax: Also, if you acquired a tax-exempt OID bond at an acquisition premium, only report the net amount of tax-exempt OID on line 2a (that is, the excess of tax-exempt OID for the year over the amortized acquisition premium for the year). This amount reduces taxable interest and is notated. Municipal bonds have a face value. Follow these steps to make a manual adjustment for the bond premium you paid on your tax-exempt bonds: Select Federal Taxes; Under Wages & Income select Interest on 1099-INT; Enter your 1099-INT information, select Continue; Select I need to adjust the taxable amount, select Continue; Enter the state that pays your tax-exempt. You are required to amortize the premium each year and this will reduce your basis (what you paid). Then select. To be included in the Index, bonds must be rated investment-grade (Baa3/BBB- or higher) by at least two of the following ratings agencies: Moody's, S&P and Fitch. Vanguard's $199 billion municipal bond lineup includes a wide range of actively managed national, state-based, high-yield, and money market funds, as well as the $20. Capital Group veteran municipal manager Chad Rach will transition out of American Funds Tax-Exempt Bond on Oct. S. How to report acquisition premium on tax exempt bonds. For a taxable covered security acquired at a premium, unless you notified the payer in writing in accordance with Regulations section 1. L. Straight line or constant yield. Below this subtotal, print “ABP Adjustment,” and the total interest you received. 1. Box 13. Therefore, the OID on tax-exempt bonds is tax free, while the OID on taxable securities is subject to taxation as interest income. whether the bond premium is de minimis (17 years times . On January 15, 1999, C purchases for $120,000 a tax-exempt obligation maturing on January 15, 2006, with a stated principal amount of $100,000, payable at maturity. A new box 13 has been added to Form 1099-INT to report bond premium on tax-exempt bonds. Follow these steps to report amounts from Form 1099-OID. Report the bond’s interest on Schedule B (Form 1040A or 1040), line 1. The issue price of the debt instrument is $110,000. 00 Tax-exempt obligations (covered lots) 0. What are the benefits of tax-exempt bonds? Interest rates on tax-exempt bonds are considerably lower than interest rates on comparable taxable obligations. However, if you acquired a tax-exempt bond at a premium, only report the net amount of tax-exempt interest on line 2a of your Form 1040 or 1040-SR (that is, the excess of the tax-exempt interest received during the year over the amortized bond premium for the year). Ask Your Own Tax Question. When governments issue bonds, specific considerations are likely to apply to bond proceeds. See Regulations section 1. 1-2022). Interest on the bond may also be exempt from local and state income taxes, which can further lower interest rates (so that they are below comparable taxable debt). A bond bought at a premium leads to a loss at maturity. 00 5- Investment expenses 0. 1041-US: Interest, dividends, and tax-exempt income FAQs. Reg. Based on the remaining payment schedule of the bond and A's basis in the bond, A's yield is 8. 8 billion Vanguard Tax-Exempt Bond ETF (Ticker: VTEB). Market Discount —For a taxable or tax-exempt covered security,Exception for De Minimis Bond Premium: If the net premium and accrued interest received from the sale of bonds is not more than $50,000, the city or town, with the approval of its mayor, city or town manager or select board (as applicable), may apply such amount to the payment of indebtedness. This is an obligation issued by or on behalf of a governmental issuer for which the interest paid is excluded from the holder's gross income under section 103. In this case, the IRS looks at what it calls combined income, which is your adjusted gross income plus tax-exempt interest and half of your Social Security benefits. The bond’s maturity period is 10 years, and the face value is $20,000. 02 Economics of Tax-Exempt Bonds 3 [1] Economic Benefits 3 [2] Bond Ratings 4 [3] Credit Enhancement 8 [4] Alternatives to Traditional Credit Enhancement 11 [5] Range of Costs 12 [6] Tax-Exempt Housing Bonds 12 1. Calculation. See § 1. Contrary to one popular misconception, despite amendments to the Excise Tax Act over the years, no changes were made to the surety bond's status as a non‐commercial activity. If there's an amount in box 8. 2. Bond Premium on Tax-Exempt Bond, later. California does not tax: Interest on governmental obligations. Fields highlighted in yellow import into the UltraTax CS Source Data Entry application. According to IRS instructions, if you entered a net amount of interest in Box 3, Box 12 can be left blank. ("Related" includes companies that are owned by a majority interest. For a tax-exempt covered security acquired at a premium, enter the amount of bond premium amortization allocable to. UltraTax CS TL 32075 Form Field Name Not Shared . 00 5- Investment expenses 0. read more Bond premium Bond premium on Treasury obligations Bond premium on tax-exempt bond Tax-exempt and tax credit bond CUSIP no. Steve McFee is the fund’s portfolio manager. (a). , prepayment date without penalty) approximately 10-years from the date of issuance. If a net amount of interest appears in box 8 or 9, whichever is applicable, box 13 will be blank. 31% (0% in CA, CT, NY) Fidelity Treasury Money Market Fund (FZFXX) 0. You are required to report tax-exempt income on Form 1040, and may be required to report it. However, some bonds, such as municipal bonds, may be exempt from federal and state taxes. • Qualified hospital bonds. In line 18 - (13) Bond premium on tax-exempt bond, enter the amount (if applicable). California Code, Revenue and Taxation Code - RTC § 24363. Enter in column C the interest you identified as tax-exempt interest on your federal Form 1040 or 1040-SR, line 2a, and which you received from: The federally exempt interest dividends from other states, or their municipal obligations and/or from mutual funds that do not meet the 50% rule as previously discussed. Higher coupons deliver more of the return sooner. A premium bond is one in which the market price of the bond is higher than the face value. Seeks current income exempt from federal tax. 9. Conceptually, this makes sense, because the income is not taxable and therefore no deduction should be allowed. Premium. Go to Screen 46, Elections. The bond premium allocable to the accrual period ending on February 1, 2000, is. You must complete your federal tax return, Form 1040/1040-SR, through the federal adjusted gross income (AGI) line before. If only two of the three agencies rate. Reg. In the case of any bond the interest on which is excludable from gross income, no deduction shall be allowed for the amortizable bond premium for the taxable year. 2 of Notice 2010. Depending on the type of bond, the premium can be tax deductible and amortized. Status Open. TurboTax Online. Should the amount shown in Box 13 1099-INT be entered on the Interest Worksheet be section D (4) or E (t)?Learn about the latest tax news and year-round tips to maximize your refund. Once information is completed, Lacerte generates an election statement with the election language and bond information. Panama Canal Zone Bonds (exempt under 31 U. Under Wages & Income select Interest on 1099-INT. While municipal bonds are available in both taxable and tax-exempt formats, the tax-exempt bonds tend to get the most attention because the income they generate is, for. That is the amortized premium paid above and beyond interest payable on covered securities and is used to offset interest received. 1 Solution. Form 8038 may not be filed before the issue date and. Click Change how i enter my form. The amount is used to reduce the amount of tax-exempt interest reported on line 8b, Form 1040, and also reduces the taxpayer's basis in the bond. Form 8038-CP - Availability of Electronic Filing; Mandatory Electronic Filing for Certain Filers in 2024. (However, see Tax-Exempt Bonds and Coupons, later. 07%. This limitation on tax-exempt OID ensuresThe amortization of a bond premium on a tax-exempt bond is the excess on its face value or the premium and part of the premium can be deducted from the interests. However, the state will only save $25. These are all from municipal bonds which are tax-free. (2) Taxable bonds. 3. Here is some helpful information from a tax professional regarding OID for tax-exempt bonds: OID is treated as interest. So when the bond matures, your basis will be the face value of the bond. ) For a callable bond, the call price becomes. If you bought the bond after April 30, 1993, you can choose to accrue the market discount over the period you own the bond and include it in your income currently as taxable interest. 00 7- Foreign country or US possession: 6- Foreign tax paid: 0. In Box 110 - Additional amount, right-click on the box and select List . As of November 13, 2023, the fund has assets totaling almost $16. His amortizable premium is $10 per year. So, much hunch is that tax-exempt interest on 1099-INT line 8 should instead be entered only on 1099-OID line 2. Amendments. (3) Cross reference. Does the bond premium get reported as tax exempt. However, each year you must reduce your basis in the bond (and tax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year. 3% tax-equivalent yield, would offer inflation-beating returns every year—right up until. I have a noncovered tax-exempt municiplal bond where the bond premium amortization (BPA) is not shown on 1011-INT, line 13 but is reported as supplemental information elsewhere in my Edward Jones statement. Special Tax Bond: A type of bond that is repaid by revenues derived from taxation of a particular activity or asset. gn. I have a client that has Tax exempt interest OF $32,958 on line 8 of his 1099-INT. SEE BLOW: If the bond yields tax-exempt interest, you must amortize the premium. The tax exempt interest from your bond will be reported as a net amount on line 2a of Form 1040. UltraTax CS TL 31223 Bond premium on Tax-Exempt Bond. Box 10 shows bond premium amortization.