If a firm repurchases bonds at a discount, the difference between the principal amount and the purchase price produces taxable income.

Name: If a firm repurchases bonds at a discount, the difference between the principal amount and the purchase price produces taxable income.
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When a firm repurchases its bonds at a discount, the difference between the principal amount and the purchase price is considered a gain, which is typically taxable as income.

If a Firm Repurchases Bonds at a Discount, the Difference