No capital gain will be considered for tax purposes when the bonds mature.
What is capital gain?
- When a capital asset is sold, its value increases, and this is referred to as a capital gain.
- Simply put, a capital gain happens when you sell an asset for more money than you paid for it initially. Almost any item you hold, whether it be something you bought for personal use or as an investment (stock, bond, or real estate), is a capital asset (furniture or a boat).
- When you sell an asset, you can realize capital gains by deducting the purchase price from the sale price. In some cases, the Internal Revenue Service levies taxes on individuals' capital gains.
- Unrealized gains and losses show a rise or fall in the value of an investment but are not regarded as capital gains that are subject to taxes.
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