Bond Premiums

If you purchase a bond at a higher amount than the maturity value, you have paid a premium which when amortized reduces the amount of interest income you have to report. There is a new line on the 2014 1099-INT (box 11)  where the bond premium is listed. Most brokers are amortizing the bond premium for you based on the constant yield method which will reduce your taxable interest income. If you hold the bond until maturity, then you will break even on the disposition.