Your Form 1099-B at year-end will list all the principal repayments you received from GNMA's or UIT's that year. The way to report these on your tax return is simply to follow the same method as in the case of a bond bought at a premium or discount.
If it is a UIT holding a taxable bond portfolio or a GNMA (always taxable), follow the rules for taxable bonds. If it is a municipal bond portfolio inside the UIT, follow the rules for premiums or discounts on tax-exempt bonds.
Click on the image to the right to access our free "return of principal" calculator.
Don't just report the principal repayment amount as your cost basis for a GNMA or taxable bond UIT! You end up losing the tax savings you are entitled to claim from the premium you paid for the UIT.
You have basis! Use it!
Return of Principal Calculator
Information provided is intended solely for cash-basis U.S. citizen individual taxpayers and is believed to be accurate for most cases but is not guaranteed. Always consult your personal tax advisor about your own situation. Suggestions are most welcome. Please email our webmaster @ costbasis.com with your comments. If this website has been helpful to you, please consider making a donation to support our efforts.