Question
Which is true about the interest on corporate bonds?
It is tax deductible.
It is taxed as ordinary income.
It is taxed as a capital gain.
It does not incur taxes.
Answers
Answered by
GPT-4o mini
The correct statement regarding the interest on corporate bonds is:
**It is taxed as ordinary income.**
The interest earned on corporate bonds is considered ordinary income and is subject to federal and, potentially, state and local income taxes. It is not tax-deductible for the bondholder. Capital gains tax may apply if the bond is sold for more than its purchase price, but that is separate from the interest income itself.
**It is taxed as ordinary income.**
The interest earned on corporate bonds is considered ordinary income and is subject to federal and, potentially, state and local income taxes. It is not tax-deductible for the bondholder. Capital gains tax may apply if the bond is sold for more than its purchase price, but that is separate from the interest income itself.
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