Box 6 - Acquisition premium. 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. A trust has amortizable bond premium on both in-state tax exempt bonds and out of state tax exempt bonds. However, some interest you receive may be tax-exempt. bonds yielded tax exempt interest for federal income tax purposes, Petitioner was required to amortize the premium. Enter a description and a positive amount for the state tax-exempt interest. IF you don't, the accrued interest will be divided up proportionately (and improperly) among boxes 1, 3. 10) ($82. The tax-exempt part of OID on the stripped bond is limited to $17. S. 00 13-Bond premium on tax-exempt bonds (categorized below) 0. 00 5- Investment expenses 0. Vanguard Style View: Muni National ShortA judge for the New York Division of Tax Appeals rejected the couple's arguments that New York's conformity to the federal code requires interest income from federally tax-exempt bonds issued by. 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. However, if the. Personal Income Tax Massachusetts General Laws exempts from income taxation interest on obligations of the Commonwealth of Massachusetts, its political subdivisions, and agencies or instrumentalities of the Commonwealth and its subdivisions. Is the line 8 amount already "adjusted" for the line 13 amount, or is the interest I sh. Unlike Tax-exempt interest dividends (Box 12 in 1099-DIV) which TT has a additional adjustment section for that I assume applies for Federal as well as the states we. C. What should I do with this?(Amortized Bond Premium). However, TurboTax will carry your entry from Box 11 in the Dividends on 1099-DIV section to this line automatically. Where do I enter bond premium non treasury obligations noncovered. California does not tax: Interest on governmental obligations. The bond pays out interest, but loses $368 of value during the holding period. bonds will be offered and traded at a “discount. For a taxable covered security acquired at a premium, unless you notified the payer in writing in accordance with Regulations section 1. S. There are three entries block 7 the description (name), box 11 Tax exempt OID ($3700) and block 6 acquisition premium ($790). For young or lower income tax payers it is probably fine to. Tax-exempt interest $ 9 . Then select Tools. 15 . • Qualified 501(c)(3) bonds. Here are seven of the best tax-free municipal bond funds to buy in 2023: Fund. 70 years. Above those thresholds, up to 85% of your benefits could be taxed. For bonds issued after 1984, the OID is treated as interest. tax-exempt Bond with bond premium must amortize. Accrued OID at Purchase = 2 /10 × $200 = $40. In the case of a bond (other than a bond the interest on which is excludable from gross income), the amount of the amortizable bond premium for the taxable year shall be allowed as a deduction. TTM Yield 3. (or it was called): Your cost basis at the date of sale is determined by the yield to maturity method. 03-06-2023, 09:01 PM. You must complete your federal tax return, Form 1040/1040-SR, through the federal adjusted gross income (AGI) line before. Municipal bonds have a face value. 8 billion Vanguard Tax-Exempt. This amount is included in line 8. Bond premium $ 11. Form . itonewbie. In the left-hand navigation, click. For a covered security acquired with bond premium, you must report the amount of bond premium amortization for the tax year. For tax-free municipal bonds, the interest is reported separately in a box labeled “Tax-exempt interest. K. Under § 1. How to enter an election to amortize bond premium. (C) Carryforward in holder's final accrual period —( 1) If there is a bond premium carryforward determined under § 1. Fidelity Tax-Exempt Money Market Fund (FDEXX) has a seven-day yield of 2. Below this subtotal, print “ABP Adjustment,” and the total interest you received. The coupon rate of interest is 10% and has a market rate of interest at 8%. The Net expense ratio is the Gross expense ratio minus any reimbursement from the Advisor. 07%. The IRS is interested in preventing issuers from “hedging” against the risk that interest rates will rise, and therefore issuing more bonds than necessary (overburdening the tax-exempt bond market). Select I need to adjust the taxable amount, select Continue. 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. Reporting bond premium amortization for noncovered tax-exempt municipal bonds. (2) In lieu of any deduction under Section 24360, the amount of any premium so allocated to any interest. Then by entering the premium amount on line 10, the net reported tax-exempt interest will be reduced. The same principle applies to Nominee. Municipal bonds ETFs are generally free from federal and state taxes if they hold only tax-exempt bonds. The TurboTax community is the source for answers to all your questions on a range of taxes and other financial topics. Ultra Short Bond Fund - the Advisor has contractually agreed to waive management fees in an amount equal to an annual rate of 0. For example, an investor in a 25% tax bracket would receive the same after-tax income from a tax-exempt bond bearing interest at 6% that he or she would receive from a taxable obligation. I have a form 1099-INT that lists tax exempt interest on line 8 and bond premium on tax exempt bonds on line 13. Vanguard Short-Term Tax-Exempt Bond ETF (VTES) is built to help you earn consistent, tax-exempt income. 99%. What should I enter in the Type Code field in the interest and dividends statements? How do I enter income from a private activity bond?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). 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). June 14, 2017. 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 &. Here's what you need to know about this type of interest and tax form. The $20,000 of interest income on United States bonds is to be subtracted from Federal adjusted gross income (see section 112. L. Despite being shown as (ii) Amount of bond premium. From a tax standpoint, life would be much simpler if all bonds were pur-chased at their par value. Referenced Sources: Massachusetts General Laws. Municipal bonds. Below this subtotal, print “ABP Adjustment,” and the total interest you received. 3 [a] of this Part). A Longstaff study found that the marginal tax rate embedded into the short term tax-exempt municipal rates is able to identify an average marginal tax rate during a particular period of 41. 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. with adjustments proper to reflect unamortized bond premium, with respect to the bond, for the period before the date as of which subsection (a) becomes applicable with respect to the taxpayer with respect to such bond. 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. 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). 04 How to Choose a Bond Financing Structure 13(ii) Tax-exempt obligations. Because discount bonds are sold below face value, it is expected. VTES may be suitable for tax-sensitive investors with a short-term time horizon and low interest rate risk tolerance. 14. o It is also possible that a bond that was issued with OID is later bought at a premium. Box 11. If there's an amount in box 8. Make a note for next year's file. Municipal bonds have a face value. Amortization of bond premium under IRC Section 171; For. with adjustments proper to reflect unamortized bond premium, with respect to the bond, for the period before the date as of which subsection (a) becomes applicable with respect to the taxpayer with respect to such bond. 6%. section 1. See the Instructions for Form 6251. Visit the Marietta Development Authority's webpage to learn more about MDA bond financing or contact The Economic Development Division for assistance. 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). Form 8038-CP - Availability of Electronic Filing; Mandatory Electronic Filing for Certain Filers in 2024. This amount is included in line 8. Under your last entry on line 1, put a subtotal of all interest listed on line 1. TurboTax Online. The 2% par bond in our example would have a modified duration of 4. 07 percent, compounded annually. Pub. Click Change how i enter my form. If you disposed of the obligation or acquired it from another. ” An investor buys a bond at a discount when the dollar price paid is below the stated face value of $100. Include in box 8 any accrued qualified stated interest on these bonds sold between interest dates (or on a payment date). Report the bond’s interest on Schedule B (Form 1040A or 1040), line 1. S Treasury Obligations. Box 3 - Early withdrawal penalty. 1. read moreI received a 1099-INT for an account holding two municipal bonds (from the same state). 74 years, while the duration of the 3% premium bond would be 4. Specified Private Activity Bond Interest — Shows tax-exempt interest subject to the alternative minimum tax. to you on Form 1099 each year since you bought the bond. 205 Lawrence Street. Learn more about mutual funds at fidelity. The total amount or a portion of tax-exempt income (reported as Specified Private Activity Bond Interest) must be taken into account in computing the federal alternative minimum tax applicable to individuals, and may be subject to state and local taxes. 17 . A copy of Form 1099-OID will be sent to the IRS. Supplemental Info not reported to IRS: Accrued Interest Paid on Purchases $1229. 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. read more Bond premium Bond premium on Treasury obligations Bond premium on tax-exempt bond Tax-exempt and tax credit bond CUSIP no. 1. Click on the box My form has info in more than just these boxes (this is uncommon). 25% of permissible premium). Fiduciary bond premiums; Legal publication costs of notices to creditors or heirs;. Non-Covered fixed income holdings (Tax exempt state bonds) reported a bond premium amortizations on a supplemental information schedule of my 1099. Level 15. 12-06-2019 04:38 PM. 1041-US: Interest, dividends, and tax-exempt income FAQs. The true interest cost (TIC) for the sale’s tax-exempt bonds is 2. In 2015, 94% of all noncallable tax-exempt bonds were issued at a premium. 22:. I have a 1099 with box 8 tax-exempt interest and box 13 bond premium on tax exempt bonds. If the taxpayer decides that it is still needed, use the Total municipal bonds and Amortizable bond premium on tax-exempt bonds fields in the Tax Exempt Interest section of Screen 11 to add box 6 and box 11. 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 &. In box 112 - FS, enter S. 25%. Nov 18,. Commissioner of Revenue. For example, a bond with a $1,000 face value may be sold for $900. The following includes answers to common questions about interest, dividends, and tax-exempt income. State tax withheld $ $ 2021. The New Jersey return asks what portion is tax exempt (due to federal or New Jersey obligations). When you purchase a bond or note at a discount, you'll get Form 1099-OID (Original Issue Discount). You choose to use annual accrual periods ending on February 1 of each year. Except as provided in paragraph (c)(3) of this section, a taxable bond is any bond other than a tax-exempt. Information about tax-advantaged bonds, including tax-exempt, tax credit and direct pay bonds. To report the amortized bond premium by: Login to Turbo Tax; Jump to Income and Expenses. If there's an amount in box 11. municipal bonds from federal income tax. If the bond yields tax-exempt interest, you must amortize the premium. For a specified private activity bond with OID, report the tax-exempt OID in box 11 on Form 1099-OID, and the tax-exempt stated interest in boxes 8 and 9 on Form 1099-INT. 67. See the instructions above for a tax-exempt covered security acquired at a premium. § 171 (b) (1) (C) —. A percentage of the income is exempt from state income tax. 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. Section 2 Tax Exempt and U. For a tax-exempt obligation that is a covered security acquired on or after January 1, 2017, shows the tax-exempt OID on the obligation for the part of the year you owned it. The investor pays no tax on the income stream from such bonds, but would also be allowed to deduct the premium, offsetting other taxable income. 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). However, each year you must reduce your basis in the bond (and t ax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year using the constant yield method. By contrast, premium bonds are rarely offered in the taxable market. That is, a bond issued at a discount might be trading at a premium price (above par) on the bond exchange. Therefore, the amount of bond issuance premium is $10,000 ($110,000−$100,000). 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. Steve McFee is the fund’s portfolio manager. 00 Reporting Premium Municipal Bond Taxes. 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). I have $398 in total Specified Private Activity Bond Interest Dividends (Box 13 in 1099-DIV) across my investments. 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 &. Y. This is because investors want a. Higher coupons deliver more of the return sooner. Solved: will negative interest income due to accrued. To report amortized bond premiums on tax-exempt bonds from 1099 box 13 follow these steps. savings bonds. C. See Publication 550. Bond premium- Tax-exempt obligations (noncovered lots) 0. 00 interest you collected on 3/31/09 and the $83. Vanguard today launched the Vanguard Short-Term Tax-Exempt Bond ETF (NYSE Arca: VTES). Tax-exempt and tax credit bond CUSIP no. In box 11, Bond Premium, put the amount. (ii) Amount of bond issuance premium. 171–4 for rules relating to the election to amortize bond premium on a taxable bond. Tax-exempt interest $500, $100 of which is attributable to accrued interest. See § 6. 73. One section of the tax rules pertaining to hedge bonds provides that to avoid a bond becoming a hedge bond, an issuer must. Refer to the screenshots below. PHONE: 800-955-2444 CONNECT: Tax Analysts is a tax publisher and does not provide tax advice or preparation services. 1099-OID. The difference between these two amounts is the OID. 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). If you make this choice, you must reduce your basis in the bond by the amortization for the year. (a). 5. How do you record bond premium on tax-exempt bonds? If the bond is a tax-exempt municipal, you report the loss of premium value and subtract the loss from. What are the benefits of tax-exempt bonds? Interest rates on tax-exempt bonds are considerably lower than interest rates on comparable taxable obligations. 183,500,000. See Regulations section 1. how do I report these in Federal Tax?. Report the bond’s interest on Schedule B (Form 1040A or 1040), line 1. Category Muni National Long. If the bond premium has not been fully amortized at the time of the sale, the unamortized portion of the bond premium must be subtracted from the purchase. Where and how do I record this. Is the tax-exempt OID on the federal level reported on the tax. When Owned by Trusts or Estates: Under Conn. The banks, however, continued to compute their net income for purposes of the Massachusetts bank excise tax without this adjustment, using original cost basis to yield a loss on redemption. See Publication 1212 if this applies for instructions on how to calculate the taxable portion. Minnesota Bond Premium Adjustment. Stat. Tax-exempt bond. Bond premium on Tax-Exempt Bond. Under § 1. read more Box 8 is showing the gross / total interest I received on these bonds, but there is nothing showing in other boxes (including box 13), even though I bought these bonds at a premium. You remove all of the box 3 $$ (and box 12, if any) and put box 3 (plus 12) on it's own 1099-INT before indicating it's accrued interest. 16 . That loss can be taken at maturity or it can be spread out over the life of the bond. Page 3 of 10 * This is important tax information and is being furnished to the Internal Revenue Service. IRC § 103 does not mention governmental bonds, but it does refer to. You have it backwards unfortunately. Do not file. Section 744 & 745 - Interest on Bonds No Port Authority of New York No Post Savings Certificates - Not. That is, a bond issued at a discount might. The fund trades on the New York Stock Exchange and comes attached with a 0. 6045-1(n)(5) that you did not want to amortize the premium under section 171, or for a tax-exempt covered security acquired at a premium, your payer mayThe adjustment will reduce your amount of reportable tax-exempt interest on Form 1040, line 8b. Subtract the bond premium amortization from your interest income from these bonds. 10. At this point, the bond may sell at a "premium" or "discount. You must complete your federal tax return, Form 1040/1040-SR, through the federal adjusted gross income (AGI) line before. The phase-out threshold is $1,079,800 for 2022 for married filing jointly. HOMEForm 8949. Amortizable bond premium is a tax term referring to the excess premium paid over and above the face value of a bond. TIR 80-2. Except as provided in paragraph (c)(3) of this section, a taxable bond is any bond other than a tax-exempt obligation. Treasury obligation and is exempt from state and local income taxes. how do I report these in Federal Tax?. A. How to report acquisition premium on tax exempt bonds. This nondeductibility (and accompanying adjustment to basis) for tax-exempt bond premiums became Federal law in 1942. In the case of a tax-exempt obligation, if the bond premium allocable to an accrual period exceeds the qualified stated interest al-locable to the accrual period, the ex-cess is a nondeductible loss. 00 Bond premium- Tax-exempt obligations (AMT, noncovered lots) 0. 07 percent, compounded annually. 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. Tax-Exempt Interest Received by Estate or Trust. 171–2(c) Example 4. 171–1, the amount of bond premium is $10,000 ($110,000−$100,000). Box 13 Bond Premium on Tax-Exempt Bond: $64. C. The IRS says: "For bonds issued after September 27, 1985, you must amortize bond premium using a constant yield method on the basis of the bond's yield to maturity, determined by using the bond's basis and compounding at the close of each accrual period. This amount is included in line 8. Enter the total on line 2a of your Form 1040 or 1040-SR. See the instructions above for a tax-exempt covered security acquired at a premium. I. C has not previously elected to amortize bond premium, but does so for 2002. It offers a 5% coupon rate that is paid semi-annually and with a yield to maturity of 3. I also have the same issue with my 1099-INT where my bond premium (box 11) is greater than interest income (box 1). Tax-exempt bonds are barred a deduction for amortizable bond premiums under IRC section 171 (a) (2). Actually, there is not a deduction for the premium you paid for your tax-exempt bonds on your federal return. You can delete Schedule B using these steps: Select Tax Tools from the menu on the left. Enter your 1099-INT information, select Continue. 25% equals 4. Box 8 is showing the gross / total interest I received on these bonds, but there is nothing showing in other boxes (including box 13), even though I bought these bonds at a premium. The OID on the stripped bond that is more than the tax-exempt part is $3. Nov 18, 2020. The firm will publicly name Lee Chu as a portfolio manager at. Interest Income. 1 Solution. For a taxable covered security acquired at a premium, unless you notified the payer in writing in accordance with Regulations section 1. 000% Dated Date: 8/31/20 Maturity Date: 4/01/27 Issue Yield/Price: 0. The tax exempt interest from your bond will be reported as a net amount on line 2a of Form 1040. Tax Topic 403 - Interest Received. 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. Hello again. These bonds are repaid with either excise taxes, special assessment taxes or ad. For the purpose of this example, assume an investor had a tax-exempt interest dividend distribution of $1,000. Do not include the accrued interest that you may have paid at the purchase date. The bond premium allocable to the accrual period ending on February 1, 2000, is. municipal bonds purchased with accrued interest paid. 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. In Box 110 - Additional amount, right-click on the box and select List . 6045-1(n)(5) that you did not want to amortize the premium under section 171, or for a tax-exempt covered security acquired at a premium, your payer may The adjustment will reduce your amount of reportable tax-exempt interest on Form 1040, line 8b. HOME Form 8949. 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. whether the bond premium is de minimis (17 years times . Enter on 1099-INT worksheet, Box 3b - Interest on Treasury obligations. While still exempt from Federal Income Tax, such amounts will be reported to the Internal Revenue Service. 06 and bond premium is $1. 10. If only two of the three agencies rate. To determine the bond premium amortization we multiply the acquisition cost times the purchase yield ($107,485)* (. B&D Interest Income State ID No. UltraTax CS TL 32075 Form Field Name Not Shared . 02-17-2020 09:00 AM. 00 Market discount (noncovered lots) 0. Tax exempt bond fund: Which one? by ram » Fri Dec 25, 2020 4:39 am. 30% (0% in CA, CT, NY) The income earned in these funds is fully taxable at the federal level. § 171 (b) (1) (C) —. However, IRC. Till recently the taxable account and Roths had all stocks and the tax deferred had almost all bonds and a small amount of stock index funds. The net amount is properly reflected on the 1040, line 2a. Conceptually, this makes sense, because the income is not taxable and therefore no deduction should be allowed. 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. 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. Municipal Income Fund would calculate that portion of the tax-exempt interest dividends they received from the fund that may be exempt from Massachusetts income tax. 07%. Acq. 1041-US: Interest, dividends, and tax-exempt income FAQs. 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. If the bond yields tax-exempt interest, you must amortize the premium. I have a form 1099-INT that lists tax exempt interest on line 8 and bond premium on tax exempt bonds on line 13. Under § 1. In the next page, - enter the NON-covered premium amount as a positive number, and. 8 billion Vanguard Tax-Exempt Bond ETF (Ticker: VTEB). However, part of the OID on a stripped tax-exempt bond, or a stripped coupon from such a bond, acquired after June 10, 1987 could be taxable. You will receive a copy of IRS Form 1099-INT, Interest Income, for each bond you held that paid interest during the year. Therefore, the sum of all amounts payable on the bond (other than the interest payments) is $100,000. See § 1. See the Instructions for Form 6251, Alternative Minimum Tax for Individuals. Note: The net amount will appear in Box 110 and will flow to the state return. 89%. The federal return asks if any portion was from US Government Interest. 00 7- Foreign country or US possession: 6- Foreign tax paid: 0. Market discount $ 11 . Under Wages & Income select Interest on 1099-INT. The bond has a stated principal amount of $100,000, payable at maturity on February 1, 2007, making your premium $10,000 ($110,000 - $100,000). Interest income from bonds is generally subject to federal income tax. The premium must be amortized and subtracted from the OID interest. In accordance with IRS-mandated changes, there are several modifications to Form 1099-INT, including: • Line 11 now reflects total bond premium for taxable covered lots; there. For example, consider that an investor purchases a bond for $1,050. Box 13: Bond premium on tax-exempt bond Go to the Input Return tab. Resources for issuers, borrowers and bond professionals. The result is $1,775. For more information,. In line 18 - (13) Bond premium on tax-exempt bond, enter the amount (if applicable). Select I need to adjust the taxable amount, select Continue. 06. Fields highlighted in yellow import into the UltraTax CS Source Data Entry application. Specified Private Activity Bond Interest — Shows tax-exempt interest subject to the alternative minimum tax. Box 13 refers to the bond premium on tax-exempt bonds. Depending on the type of bond, the premium can be tax deductible and amortized. Amortization Methods for Premium Bonds. 10-2019). (Sections 612(c) (1) and (c) (2) of the. Bonds and bond funds are taxed in 2 ways—based on the income that's distributed and on any gains if the investment is sold at a profit. *Panama Canal Bonds Specifically Exempt from Tax by U. box 2 is tax-exempt interest and is not included in interest income on your tax return. That tells you how much to amortize on a monthly basis. Where is the Definition of Governmental Bonds? Treas. Boxes 12 - 14 show state. Check it out. For each year that the premium is amortized, Janice’s cost basis (the $1,030) is reduced by the annual $10 amortization under IRC § 1016 (a) (5) and reflected by the broker as well under Treas.