Section 24360-24363(a) - Amortizable Bond Premium(1) In General. Under Section 24360, bond premium is amortizable by the owner of the bond (as defined in Reg. 24360-24363(d)) in accordance with paragraph (A) or (B) of this subsection as follows: (A) Amortization of bond premium is mandatory with respect to-- (i) Fully tax-exempt bonds (the interest on which is excludable from gross income under Chapter 3).(B) Amortization of bond premium is optional, at the election of the taxpayer, with respect to-- (2) Operation. (A) In the case of a fully tax-exempt bond, the amortizable bond premium for the income year is simply an adjustment to the basis or adjusted basis of the bond. Thus, if such premium is $1, the basis or adjusted basis of the bond is reduced by $1. No deduction is allowable on account of such amortizable bond premium. See subsection (2)(B) of Reg. 24360-24363(b) for treatment of bonds with alternative call dates.(B) In the case of a fully taxable bond to which Section 24360 is applicable, the amortizable bond premium is applied both as an adjustment to the basis or adjusted basis of the bond and as a deduction in computing net income. For the disallowance of a deduction in certain cases, see subsection (1)(C) of Reg. 24360-24363(b).Cal. Code Regs. Tit. 18, § 24360-24363(a)
1. New section filed 12-22-69; effective thirtieth day thereafter (Register 69, No. 52).[FN*]
This regulation is based on Section 26 CFR 1.171-1. Note: Authority cited: Section 26422, Revenue and Taxation Code.
1. New section filed 12-22-69; effective thirtieth day thereafter (Register 69, No. 52).