Premiums Paid On The Purchase Of Taxable Bonds

Premiums paid on the purchase of taxable bonds may be written off over the term of the bond.  It’s deducted as investment interest expense. For example, you purchase a 6% 5-year $5,000 face value bond for $6,000.  The additional $1,000 you paid for the bond is deductible proportionately over the life of the bond.