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Finra Exam Series-7 Topic 5 Question 95 Discussion

Actual exam question for Finra's Series-7 exam
Question #: 95
Topic #: 5
[All Series-7 Questions]

Bubba buys a municipal bond at 102 and holds it ten years to maturity.

For tax purposes, how is that premium treated?

Show Suggested Answer Hide Answer
Suggested Answer: B

the LEAPS premium will be higher than the traditional option premium. Because LEAPS have a longer time until expiration than traditional options, the premium should be higher.


by Valentine at Aug 24, 2024, 09:51 AM

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Eura
2 months ago
Whoa, hold on there, Avery! Y'all know that amortizin' the premium is the way to go. Ain't no need for all that fancy footwork.
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Avery
2 months ago
Hmm, carryin' that premium loss forward sounds like a mighty fine idea. Might just give that a try.
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Esteban
2 months ago
Shoot, I was fixin' to claim it as a capital loss. Guess I better double-check that before sendin' in my taxes.
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Tamar
21 days ago
D) carried forward as a premium loss applied against profits realized on future municipal securities
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Jolanda
23 days ago
Oh really? I thought it was an ordinary loss deduction.
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Myra
1 months ago
C) amortized over the life of the bond resulting in no loss at maturity
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Mee
2 months ago
A) recorded as a long-term capital loss
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German
2 months ago
Hold up, y'all! Ain't we 'sposed to amortize that premium over the life of the bond? Seems like the right way to go 'bout it.
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Ayesha
28 days ago
So, the premium won't result in any loss at maturity if it's amortized.
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Carlene
1 months ago
That's correct. It's not recorded as a long-term capital loss or an ordinary loss.
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Stevie
1 months ago
Yeah, you're right. The premium should be amortized over the life of the bond.
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Julene
3 months ago
Dang, this bond premium thing is confusin' me. Reckon I need to consult my good ol' tax accountant on this one.
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Rosann
29 days ago
Yeah, it's all about that amortization. Good thing we're talking it out!
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Reita
1 months ago
I think it's C too. That premium gets spread out over time.
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Maricela
2 months ago
C) amortized over the life of the bond resulting in no loss at maturity
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Barb
2 months ago
A) recorded as a long-term capital loss
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Yesenia
3 months ago
I'm not sure, but I think it's recorded as a long-term capital loss.
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Mabel
3 months ago
I agree with Tarra, it makes sense to spread out the premium over the bond's life.
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Tarra
4 months ago
I think the premium is amortized over the life of the bond, so no loss at maturity.
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