Tax Question on Zero Coupon Bond - FreeTax USA

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Beachey
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Joined: Wed Sep 02, 2020 9:54 am

Tax Question on Zero Coupon Bond - FreeTax USA

Post by Beachey »

I am using Free Tax USA, this is my first time reporting a Zero-Coupon US Treasury Bond.

On the 1099-B from Fidelity, Box 1f has the Accrued Market Discount which is the same as the Capital Gain since I bought at issuance creating a $0 Capital Gain. Free Tax USA then transfers the Discount to Schedule B as Interest. So far this all makes sense.

Free TAX USA then asks "Is this a partial payment of principal on a bond?"

I think that the answer to this is NO. Whether I check YES or NO it does not seem to affect my tax owed.

Is the answer NO? And under what circumstances might it be YES?
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