Tax FAQ
 

Is It Time To Convert To A Short Term Tax Exempt Bond Fund?

Question by Borovichinovick | Posted in Investing

Currently I have about $130,000 in Vanguard Middle Term Tax Exempt Fund.

Should I convert some of it into Vanguard Short Term Tax Exempt Fund?

If so how much or what percent would you advise.

This is in a regular account.

Reason I'm thinking about doing it is increase in interest rates.
I'm 53 and envisage on investing moderately aggressively for another 15-20 years.

Answer: I tally interest rates are going to go up and bonds will lose a little capital. But the recovery is still anemic so when and how constant is still in question.

If you are trying to make a little money by market timing bonds it is something to about. But in this case you also give up yield when going shorter which acts against you and reduces timing profits.

And a bond endow is different than owning bonds outright. If you owned bonds it might be a better understanding than
 
 

The Coupon Rate On A Tax-exempt Bond Is 5.6%, And The Rate On A Taxable Bond Is 8%.Both Bonds Sell At Par. The?

Question by Sam | Posted in Investing

The coupon evaluate on a tax-exempt bond is 5.6%, and the rate on a taxable bond is 8%.Both bonds sell at par. The tax bracket (insignificant tax rate) at which an investor would be indifferent between the two bonds is:
A. 30.0%.
B. 39.6%.
C. 41.7%.
D. 42.9%.

Answer: Do the math.

A 10000 bond at 8% will engender $800 in income. At 5.6% it will generate $560.
If you pay taxes of 30% on the 800 that will be $240 leaving you with $560, the consummate same as the tax free did. The first responder is correct.

Related Topics:

Tax Exempt Forms
The Fair Tax
Tax Form Refund

 
 

How Do You Declare On 1040 The Earnings From A 1009-B --for A Tax Exempt College Savings Bond (from Illinois)?

Question by idic5 | Posted in United States

when I followed taxcut's q and a , the earnings were ADDED to my return. I assume taxcut and I are not understanding each other since I am sure that this is a tax EXEMPT college savings bond from Illinos. Does nt tax EXEMPT suggest it does not add to your income? Or, is there a place later that takes this earning away? Taxcut did not take it away
I redeemed it, cashed it in. I suppose it matured. I pd 2,500 in 1994 and 14 yrs later I cashed it in for 5,000.
it was designed for college

Answer: If you SOLD the bond, the come to is not tax-exempt, even if the interest was.

When you bought the bond, what did you pay? When it reached maturity, what was it worth? You have to amortize any discount and the basis adjusts for the amortization--that way if you maintain the asset until it matures, you do not have a gain. The amortization amount is classified as interest. See publication 550.

Related Topics:

Tax Expert
Tax Form Canada
2008 Tax Stimulus

 
 

1099-B Maturity Of Tax Exempt College Bond. Must I Claim It As Income?

Question by needsomehelp | Posted in United States

Illinois offered these bonds many years ago. After holding bond until ripeness, it is now listed on the 1099-B form. Do I claim this as income?

Answer: Go to IRS.GOV click special on the left top corner then in the box in the upper right corner you will see a box inter 1099b. You will find out haw you penury to file. Some times they make you report things that are not considered income. Its more for informational purposes

Related Topics:

Tax Extensions
2008 Tax Relief
Tax Free Bond

 
 

Corporate And Tax-exempt Municipal Bond Rates?

Question by trang k | Posted in United States

"If mediocre corporate bond and tax-exempt municipal bonds rates were 7.25% and 5.95% respectively, at what tiny tax rate would an investor be indifferent between the two?"

I have applied the formula: im = it(1-t)
5.95%/7.25% = 1-t
then t = 1- (5.95%/7.25%) = 17.93%
I don't know whether I got it upper b/c I don't have any illustrated problem like this, just the formula. However, the homework problems bellhop contains this one.

Is there

Answer: Looks adept to me. Marginal rates above that are common for middle to upper class people.

Related Topics:

Tax Filings
2008 Tax Schedule
Free Tax Efile

 

Bond Investing : How Do Tax-Exempt Bonds Work?

Tax-exempt bonds are issued by municipalities, such as states, cities, towns and estates, and this is done in position to raise money to build ...

Think locally, act globally « self-evident

by Bond Girl

  According to the Bond Client :. Buy-side and self-confident peddle participants say the market is positively saturated, and the neutralizing talk and the largesse of scrap boosts the power of institutional investors to coerce up yields in make for Illinois...   The stage plans to affair some $900 million of Develop America Bonds (BABs), which should take the amount of liable it has issued so far this year to over $8. “It’s unceasing on both the BAB and tax-exempt sides. Nuveen placed an appropriate on the asseverate’s sales tax-backed refunding last week. also in the works are a Cyclopean needful of-incumbency borrowing, tobacco securitization, and dismiss borrowings.   And the allege is improbable to terminal there.   It does not succour that the have’s economic imagine is making California look facts. One would not describe Illinois’ upcoming present as well-received in the marketplace....

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Tax-exempt bonds are issued by Royal and local. governments to fi nance a variety of ... Tax-exempt private operation bonds include "exempt facility bonds," qualifi ed mortgage ...

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