Income taxation on the interest earned from an investment in a zero coupon bond occurs when the bond matures.

Name: Income taxation on the interest earned from an investment in a zero coupon bond occurs when the bond matures.
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Income taxation on the interest earned from a zero coupon bond typically occurs annually as the bond accrues interest, even though the investor does not receive the interest payments until maturity. This is known as imputed interest or phantom income.

Income Taxation on the Interest Earned from an Investment in a Zero