Submitted By: William
Answered: November 4, 2014 8:30 am

I sold municipal bonds at a loss this year. Is the loss deductible?

While the interest on municipal bonds is tax free, this doesn’t mean gain or loss on the sale of bonds is excludable from gross income. Gain or loss on the sale of municipal bonds is figured in the same way as for any other asset. What’s more, municipal bonds are includible in a decedent’s gross estate for estate tax purposes.

Tax Glossary

Ordinary income

Income other than capital gains.

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