# Treasury bills (T-bills) and stripped bonds

When a T-bill or 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.

Use the following to calculate your capital gain or loss:

## Step 1 – Determine the amount of interest accumulated to the date of disposition

• Purchase price
• times by Effective yield rate
• times by Number of days T-bill held
• divided byNumber of days in the year sold
• equalsInterest to be included in income

## Step 2 – Subtract the interest from the proceeds of disposition

• Proceeds of disposition
• minusInterest
• equalsNet proceeds of disposition

## Step 3 – Calculate the capital gain or loss

• Net proceeds of disposition
• minusAdjusted cost base
• equalsCapital gain
• Example

Jesse bought a T-bill on May 1, 2023, for \$49,500. The T-bill's term is 91 days and its maturity value on August 1, 2023, is \$50,000. However, he sold it on June 13, 2023, for \$49,750. The effective yield rate was 4.05%.

## Step 1 – Determine the amount of interest accumulated to the date of disposition

• \$49,500 Purchase price
• times by 4.05% Effective yield rate
• times by 44 Number of days T-bill held
• divided by365 Number of days in the year sold
• equals\$241.67 Interest to be included in income

## Step 2 – Subtract the interest from the proceeds of disposition

• \$49,750 Proceeds of disposition
• minus\$241.67 Interest
• equals\$49,508.33 Net proceeds of disposition

## Step 3 – Calculate the capital gain or loss

• \$49,508.33 Net proceeds of disposition
• minus\$49,500 Adjusted cost base
• equals\$8.33 Capital gain

## Completing your Schedule 3

Report dispositions on lines 15199 and 15300 of Schedule 3.

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