- quote -

These are in no way guaranteed by anyone, except by an
outfit called Doral Financial Group whose stock is in
serious decline.

I observed the same thing A. G. Kalman did -- that the bonds
are included in many "tax free" mutual funds. In one such
fund they are called "exempt". Also one bond trader at
Schwab mumbled something about "these are tax free". On the
other hand, they are traded on the NASD bond system and not
the municipal bond system.

- quote -

Yes, I have been looking for such data without results so
far. I also may have more of a clue in Januaray when I get
the 1099. Thanks again.

Steve

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- quote -

Ah. So would I.

The exemption is for bonds issued by the Government of
Puerto Rico. These bonds may not qualify. It has to be an
obligation of the Puerto Rican government, IOW, backed by
the "full faith and credit" of the government. See IRC Sec.
103(c)(1) and (2).

I think you will have to look a little deeper. If the bonds
are not a direct obligation of the PR government, but are
guaranteed by the PR or US federal government, I believe the
interest would not be exempt (similar to FNMAs or GNMAs for
state income tax purposes). I think you need to look at the
terms of the bonds themselves, and maybe also the
legislation authorizing their issuance.

Katie in San Diego

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- quote -

I don't have a cite, but there are a bunch of closed end
funds called the Puerto Rico Fixed Income Fund, Inc. I, II,
III etc. Take a look at the annual report for fund III. It
lists the holdings and identifies which of the PR holdings
are tax-exempt. The trust bonds are listed as tax-exempt.

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wrote:

- quote -

Thanks. (Thank you Katie also.)

The Puerto Rico Conservation Trust is a private non-profit
organization, created by acts of Congress and by the
Commonwealth. I also believe the bonds are tax-exempt, but
if there's a cite for this I'd be happier.

Steve

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Steve Pope wrote:

- quote -

They are triple tax-exempt (Federal, any US State & Local).

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Steve Pope wrote:

- quote -

Interest on obligations issued by the Commonwealth of Puerto
Rico is exempt for both federal and California income tax
purposes.

Note that for California corporate franchise tax purposes,
there is no exempt interest income.

Katie in San Diego

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I have some Puerto Rico Conservation Trust bonds (6.1% due
5/1/2012) -- are these federal and/or California state tax
free?

Thanks

Steve

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