Rob1 wrote: ↑
Wed Nov 20, 2019 8:17 pm
123 wrote: ↑
Wed Nov 20, 2019 7:55 pm
Sell ASAP. Since the bonds are not for your state there may be an issue of amortizing the bond premium value (the extent to which the value of the bond exceeds par value) if you are in a state with an income tax. Potentially a headache.
I hadn't thought of this. Thanks!
OP, regardless of your decision, I would encourage you to get a handle on the tax implications. Don't know your state situation, so I'll just touch on federal. You didn't mention cost basis, but that is critical. The interest payments won't be taxable by the feds as income, but do affect MAGI & perhaps affects AMT (likely a long shot there) . However, IF you sell, that will create a capital gain/loss. Assuming the bonds were at a premium when you inherited, the IRS will require you to adjust your cost basis to reflect the amortization of that premium as you receive payments. If you've already received one/some, be sure to consider that.
If you aren't familiar with individual municipal bonds, the taxation & trading of them can be surprising.
btw. without knowing all the details, I can't imagine I'd sell them this close to maturity....