Income Beginner: Taxes in Bond Investing

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1.
The amount of one's original issue discount interest can be found on Form 1099-OID.
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True. Form 1099-OID exists just for this purpose.
2.
You don't have to pay state income taxes on interest earned from Treasury inflation-adjusted securities.
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True. You are exempt from state income taxes on interest earned from Treasury inflation-adjusted securities.
3.
Assume that you are in the 32 percent federal tax bracket and you pay a 5 percent state tax. What will be your taxable equivalent yield on a municipal bond earning 4 percent?
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6.19 percent.
4.
All the earnings on a municipal bond are tax-free at the federal level.
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False. The capital gains on the sale of a municipal bond are taxable.
5.
If you are in the 35 percent tax bracket and you are contemplating buying a municipal bond that pays a 7 percent yield, how much will you need to earn on a taxable bond to equal what you will earn on the municipal bond?
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10.77 percent.
6.
The tax advantages of Series EE and Series I bonds include all of the following except _______.
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No federal tax on earnings. Unless the bonds are owned by your child or special exclusions for educational expenses apply, you must pay federal taxes on the earnings of your Series EE and Series I bonds. State and local taxes, however, are not paid.