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I received a 1099-Int with an amount in box 11, Bond

Premium, covered lots. Furthermore, there...
I received a 1099-Int with an amount in box 11, Bond Premium, covered lots. Furthermore, there is an amount in box 1, Interest Income. Would I include the Box 11 amount in interest income or subtract it from the Box 1 amount?
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10/16/2017
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Hello. Thank you for choosing this Q&A service for assistance. My name is Angela. I will be assisting you.

Q: Would I include the Box 11 amount in interest income or subtract it from the Box 1 amount?

A: Based on the following information, you would subtract the bond premium amount from the interest income. SEE BELOW:

------------------------

Subtract the bond premium amortization from your interest income from these bonds.

Report the bond's interest on Schedule B (Form 1040A or 1040), line 1. Under your last entry on line 1, put a subtotal of all interest listed on line 1. Below this subtotal, print "ABP Adjustment," and the total interest you received. Subtract this amount from the subtotal, and enter the result on line 2.

If the amount of your bond premium amortization for an accrual period is more than the qualified stated interest for the period, you can deduct the difference as a miscellaneous itemized deduction on Schedule A (Form 1040), line 28.

But your deduction is limited to the amount by which your total interest inclusions on the bond in prior accrual periods is more than your total bond premium deductions on the bond in prior periods. Any amount you cannot deduct because of this limit can be carried forward to the next accrual period.

REFERENCE SOURCE:

https://taxmap.irs.gov/taxmap/pubs/p550-015.htm

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Customer reply replied 1 month ago
Thanks. Is that the same as for box 13 (Bond Premium on tax-exempt obligations)?

Hello again.

No. SEE BLOW:

If the bond yields tax-exempt interest, you must amortize the premium. This amortized amount is not deductible in determining taxable income. However, each year you must reduce your basis in the bond (and tax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year.

For a tax-exempt covered security acquired at a premium, box 13 shows the amount of bond premium amortization allocable to the interest paid during the tax year.

Same reference source as previous response.

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Customer reply replied 1 month ago
Great, thank you!

You are very welcome. Thank you for the positive rating. I do appreciate it.

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