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.
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:
$49,500 × 4.05% × 44 ÷ 365 = $241.67
Jesse calculates his capital gain as follows:
$49,750 $241.67 = $49,508.33
$49,508.33 $49,500 = $8.33
Completing your Schedule 3
Report dispositions on lines 15199 and 15300 of Schedule 3.
Forms and publications
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