Premium Bond

Premium Bond means:
a bond with a selling price above the face or redemption value. A bond with a face value of $1,000, for instance, is a premium bond if it sells for $1,050. For tax purposes, the premium may be amortized on a straight-line basis over the life of the bond. When an instrument bought at a premium is sold or redeemed, the difference between the sale or redemption price and the amortized purchase price is a capital gain or capital loss.

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.