Tax Treatment of Municipal Securities

What this video covers

• Which municipal bonds are exempt from federal income tax, and which are fully taxable like Build America Bonds
• When a bond is triple tax-free (federal plus state plus local) versus when only the federal exemption applies
• Why U.S. territory bonds (Puerto Rico, Guam, USVI) are triple tax-exempt for investors in every single state
• Why capital gains on municipal bonds are never tax-exempt even when the interest is completely tax-free
• How premium amortization works on municipal bonds, and why it is specifically not deductible
• The critical distinction between original issue discount (OID) accretion (tax-exempt interest) and market discount accretion (taxable ordinary income)
• When the de minimis exception applies to market discount, converting what would be ordinary income into capital gain
• Which private activity bonds trigger the alternative minimum tax (AMT) preference item, and which governmental and nonprofit bonds do not