If you have your original trade confirmation, you get five stars! If not, you can still compute the amortization tables you need to account properly for gain or loss on a bond or note, but with more effort.
The tools below will help you calculate yield and amortization tables.
Use the Yield to Call whenever you buy a callable bond at a premium over par value.
If you do not have the trade confirmation which states the yield to maturity or yield to call on your bond, you can compute it using the yield calculator.
An accurate yield to maturity or yield to call is essential to your cost basis calculations because the whole amortization table depends on it.
From your monthly account statements or from your broker, find out what price you paid for the bond. You will also need the coupon interest rate, maturity date, call features (if any), par value, interest payment frequency, first coupon date, dated (issuance) date, and settlement date.
Click on the image below to access the yield calculator, then select the button "use calculator"
You can also use this helpful tool to check the accuracy of the yield to maturity or yield to call which is displayed on your trade confirmation and to check the accuracy of the yield quotes which your broker is giving you. The calculator tool uses industry standard calculation specifications when you do not know the factor used.
Now that you have your yield to maturity or yield to call data, you can produce the amortization tables that you need to determine your cost basis at any point during the life of the bond or note.
This tool generates a table for either discount accretions or premium amortizations.
Click on the image below to access the amortization table generator.
Amortization Table Generator
A special problem is presented when a tax-exempt bond has multiple call dates and call prices. How do you amortize such a bond? The proper method is to amortize in phases, always choosing the worst yield each time. A detailed example of a bond premium amortization table for a callable tax-exempt can be found in the Excel worksheet to the right.
Information provided is intended solely for U.S. individual cash-basis taxpayers and is believed to be accurate for most cases. Always consult your personal tax advisor about your own situation. Suggestions are most welcome. Please e-mail webmaster @ costbasis.com or write to us at P O Box 11022, Chicago IL 60611 with your comments.