Question

Which is true about the interest on corporate bonds?

a. it is tax deductible
b. it is taxed as ordinary income
c. it is taxes as a capital gain
d. it does not incur taxes

Answer 1

Interest on corporate bonds is taxed as ordinary income.

Step-by-step explanation:

The correct answer is option b. it is taxed as ordinary income.

Interest on corporate bonds is considered taxable income and is subject to ordinary income tax rates. The income earned from corporate bonds is added to an individual's total income and taxed accordingly.

For example, if someone earns $1,000 in interest from corporate bonds and their tax rate is 25%, they would owe $250 in taxes on that income.

Answer 2

Interest corporate bonds is taxed as an income tax but can also be tax as capital gain. Usually the interest itself is considered as state income tax. For gain and losses, that's the time it will gain capital gain if the if is redeemed before its maturity stage.