Tax Treatment of Municipal Securities: Municipal Analysis and Pricing

What this video covers

• Why interest on most municipal bonds is exempt from federal income tax, and why that drives lower nominal yields than comparable taxable bonds
• Which bonds are triple tax-exempt in every state: U.S. territory bonds including Puerto Rico, Guam, and the Virgin Islands
• The mandatory premium amortization rule for tax-exempt munis, why the amortized premium is not tax-deductible, and why there is no capital loss at maturity
• How original issue discount (OID) accretion on tax-exempt bonds is treated as tax-free interest, while market discount is taxed as ordinary income
• The de minimis threshold formula (0.25% x face value x years to maturity), and why exceeding it by even one cent makes the entire discount ordinary income
• Which municipal bonds trigger the alternative minimum tax (AMT): private activity bonds versus essential purpose bonds that do not
• Why Build America Bonds (BABs) are fully taxable at the federal level and suited for lower-bracket investors or tax-exempt accounts
• What bank-qualified bonds are ($10 million or less issuer), the 80% bank deduction on carrying costs, and why retail investors receive no extra tax benefit