Bond Discount

Bond Discount means:
the difference between a bond's current market price and its higher face value or maturity value. A bond may be issued at a discount, or a discount may result from a general interest rate increase or an increased risk of default. A buyer who acquires a taxable bond at an original issue discount realizes the discount as ordinary income as the bond matures, in addition to receiving periodic interest payments. An investor who purchases a bond at a discount caused by a market decline realizes capital gains treatment upon sale or maturity. The zero-coupon bond offers an extreme example of an original issue bond discount.

See also other Tax Terms and Definitions in U.S.A.

acquisition discount.

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