Accrued Market Discount

Explore commonly used personal finance terms.

Accrued market discount is the increase in value that occurs when a bond is purchased at a discount (below par value) and held until maturity or sale. The discount is treated as taxable income when realized, and investors are required to report it on their tax returns. Tracking accrued market discount is essential for accurate tax reporting and investment returns, as it reflects the gain attributed to purchasing the bond at a lower price rather than interest payments. It impacts the bond’s overall yield and investment value.

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