If bonds that originally were sold at a premium are redeemed, the calculation of the gain or loss must take into account the unamortized premium through the date of redemption.

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Quizplus · Accepted Answer

This is true. The unamortized premium is the amount that the issuer received above par value at the time of issuance, and it is amortized (spread out) over the life of the bond as an adjustment to the interest expense. If the bonds are redeemed before maturity, the remaining unamortized premium must be subtracted from the redemption price to derive the gain or loss on redemption.

If Bonds That Originally Were Sold at a Premium Are