RE: RE: RE: RE: RE: Bondholders will make money of "The reality of income tax on the interest"
Ummm Pheonix, unless I profit there is no net income tax. What I will pay up front of this issue being settled, is essentially claimed back on the capital loss, so unless I make a net profit on this play, income tax does not come into the equation. I will give you an example. I paid $12.50. If I receive 1 years interest ($6.25) then I owe tax on that. Now if they settle with me on the debenture for $6.25 then the whole thing is a wash. I will have $6.25 taxable on the interest but a $6.25 loss on the capital so no net income tax is due and I have my $12.50 back...Understand?. If I pay income tax on my investments it means I made money on the bottom line which means I will not be crying a tear. You will learn these things if and when you ever have a profitable year.
" receipt of interest does not reduce your cost base."
Cost base in the context that I am using it is the net out of pocket expense. With each interest payment that most certain is reduced.