<kramer.newsreader[at]gmail.com> wrote:

- quote -

If the instrument has a life of one year or less then you
declare it as income in the year the interest is credited,
though there are some exceptions for mutual funds including
bond funds.

If the instrument has a life of more than a year, e.g., a
3-year Certificate of Deposit, or a 5-year Treasury Zero,
then you must recognize as income the accrued interest at
least annually, whether this is paid to your account or not.

Note some instruments might have both Interest & OID and
capital gains associated with them.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

kramer.newsreader[at]gmail.com wrote:

- quote -

You're taxed when you receive the money, i.e. when it's paid.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

kramer.newsreader[at]gmail.com wrote:

- quote -

When the bank actually pays you the interest on the CD you
have taxable interest income. Bonds that pay interest
operate the same way. Bonds that do not pay interest, such
as zero coupon bonds (bonds that are issued at a discount to
maturity) generate OID (original issue discount). You have
to declare the OID as taxable interest income in each year
until the bonds are disposed of or mature. There are certain
exceptions to OID. See IRS Pub 550 below for more
information on OID.

The IRS publications are a good source on how your investments
are taxed.
Pub 550, Investment Income & Expenses
Pub 551, Basis of Assets
Pub 544, Sales & Other Dispositions of Assets

http://www.irs.gov/publications/index.html

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

kramer.newsreader[at]gmail.com wrote:

- quote -

If the CD is for one year or less, interest is credited and
taxes are due at maturity. If the CD is for more than one
year, taxes are due each year on the accrued interest.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Hi. If I have an investment that earns interest during a
specific year, but that interest is not paid to me that
year, will I be taxed on the income for the year that the
interest is earned or will I pay taxes for all the interest
that I receive the year that it is paid.

Specifically, I'm looking at investing in a CD that pays at
maturity. What about bonds? Is there any good web resource
for how taxes apply to investments?

Thanks, guys.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >