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Loss from sale of tax-free bonds
Q
I was under the impression that a loss from the sale of tax-free bonds is not deductible for tax purposes.
A
James A. Klotz responds:
A capital loss realized from the sale of a tax-free bond can be applied dollar for dollar against capital gains in your portfolio. If you have no gains to offset, you may deduct up to $3,000.00 from your adjusted gross income. Any remaining losses can be carried forward, to offset capital gains in future years.
You may be confusing this with a bond purchased at a premium, which matures at 100.00. The IRS does not consider this a capital loss for tax purposes.
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