Zebra Taxation Method: How Zero-Coupon Bonds Are Taxed Annually
Zebra in finance refers to a specific taxation method applied to zero-coupon bonds, where the accrued interest, known as imputed or phantom income, is taxed annually even though the bondholder does not receive actual interest payments until maturity. In the case of zero-coupon bonds, investors purchase these bonds at a discount to their face value. […]
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