of R egistered I nterest and P rincipal S ecurities. Various local municipalities are significant issuers of zero-coupon bonds as they seek to code promo tematurnier raise capital to support infrastructure and other projects; some of these bonds are triple tax-free, with the income they generate exempt from income tax at the federal, state and local levels. The investor also receives the principal or face value of the investment when the bond matures. An alternative form is to use a custodian bank or trust company to hold the underlying security and a transfer agent/registrar to track ownership in the strip bonds and to administer the program. When the bond reaches maturity, its investor receives its par (or face) value.
This I did do at this point without any problems. In most countries, strip bonds are primarily administered by a central bank or central securities depository. If issued by a government entity, the interest generated by a zero-coupon bond is often exempt from federal income tax, and often from state and local income taxes too. The recipient, on the other hand, will receive significantly more than 1,000 when the bond matures. Taxation should generally be held in tax-deferred retirement accounts, to avoid paying taxes on future income. For example, a 20,000 bond can be bought for far less than half of that amount. 1, note that this definition assumes a positive time value of money. 1273 "Zero Coupon Bonds". Treasury that were often given as gifts to small children. For this reason, zero-coupon bonds issued by corporations are often purchased in tax-deferred plans such. Although the lack of current income provided by zero-coupons bond discourages some investors, others find the securities ideal for meeting long-range financial goals like college tuition.