# Treasury bills (T-bills) and stripped bonds

When a T-bill or a stripped bond is issued at a discount and you keep it until it matures, the difference between the issue price and the amount you cash it in for is considered to be interest that accrued to you. However, if you sell the T-bill or stripped bond before it matures, you may have a capital gain or loss in addition to the interest accrued at that time.

Before you calculate your capital gain or loss, you have to determine the amount of interest accumulated to the date of disposition. Subtract the interest from the proceeds of disposition and calculate the capital gain or loss in the usual way.

## Example

Jesse bought a T-bill on May 1, 2020, for \$49,500. The T-bill's term is 91 days and its maturity value on August 1, 2020, is \$50,000. However, he sold it on June 13, 2020, for \$49,750. The effective yield rate was 4.05%.

Jesse calculates interest on the T-bill as follows:

Purchase price × Effective yield rate × Number of days T-bill held ÷ Number of days in the year sold
= Interest to be included in income

\$49,500 × 4.05% × 44 ÷ 365 = \$241.67

Jesse calculates his capital gain as follows:

Proceeds of disposition Interest = Net proceeds of disposition

\$49,750  \$241.67 = \$49,508.33

Net proceeds of disposition Adjusted cost base = Capital gain

\$49,508.33  \$49,500 = \$8.33

Report dispositions on lines 15199 and 15300 of Schedule 3.