Municipal Bond

Municipal Bond

Municipal Bond means:
a bond issued by a state or local government body such as a county, city, town, or municipal authority. Interest earned on a municipal bond is generally not taxable by the U.S. government or in the jurisdiction that issued that bond. Any gain realized from the sale of municipal bonds is taxable as a capital gain, and any loss is a capital loss, subject to the capital loss deduction.

Description and Definition of Municipal Bond

A bond issued by a state or local government. Interest earned is generally tax-free. The interest may or may not be taxable by your state, depending on its laws and whether the bond was issued by your state or an authority in your state. When you sell a municipal bond you may have a capital gain or a capital loss subject to the capital gain and loss rules.

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