Anyone know anything about Capital Appreciation Bonds?

We have one that matured this month, and we'd like to cash it in but are curious what we need to do in regards to tax implications, etc.

Please FM if you know anything about this.

Thanks!

Re: Anyone know anything about Capital Appreciation Bonds?

bumping for morning crew... thanks!

Re: Anyone know anything about Capital Appreciation Bonds?

CAPITAL APPRECIATION BOND (CAB) – A municipal security on which the investment return on an initial principal amount is reinvested at a stated compounded rate until maturity, at which time the investor receives a single payment (the “maturity value”) representing both the initial principal amount and the total investment return. CABs typically are sold at a deeply discounted price with maturity values in multiples of $5,000. CABs are distinct from traditional zero coupon bonds because the investment return is considered to be in the form of compounded interest rather than accreted original issue discount. For this reason only the initial principal amount of a CAB would be counted against a municipal issuer’s statutory debt limit, rather than the total par value, as in the case of a traditional zero coupon bond.

Re: Anyone know anything about Capital Appreciation Bonds?

yay-- so excited someone knows what this is!

ok-- so in layman terms-- you only pay tax on the original price? Any tricks on cashing it, and what kind of accounts it needs to be deposited in-- or the taxes are just simply on the original purchase price? And, I assume you can do it with any bank?

Thanks so much!