When a taxable bond is issued at a premium, the taxpayer may elect to calculate and apply the yearly amortization amount to reduce a portion of the actual interest payments that taxpayers include in gross income.

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When a taxable bond is issued at a premium, the taxpayer may elect to calculate and apply the yearly amortization amount to reduce a portion of the actual interest payments that taxpayers include in gross income. This is known as amortizing the premium on the bond, and it reduces the amount of taxable interest income the taxpayer must report each year.

When a Taxable Bond Is Issued at a Premium, the Taxpayer