When corporate bonds, which are not original discount bonds, are sold between interest dates, the accrued interest to the date of the sale must be reported by the seller as taxable interest income. When the purchaser receives the next payment, the total amount must be reported as taxable interest income and the accrued interest shown as an adjustment (or subtraction).

Question

Quizplus · Accepted Answer

This is correct per IRS regulations on the reporting of interest income for corporate bonds sold between interest dates.

When Corporate Bonds, Which Are Not Original Discount Bonds, Are