Do I need to report a capital gain or loss for selling a bond or selling shares in a mutual bond fund?
Sales of shares of any mutual fund are always reported on schedule D. You may have a gain, or loss or neither. If you sold a bond for more than you bought it for, you have a capital gain on the sales price less the purchase price plus commissions. However, be careful if it was a bond (e.g., a zero coupon bond), where you were required to report the annual increase in value (OID) as interest income. In that case add the reported OID over the life of the bond to your cost to get your basis before you determine whether this a gain or loss. You (and the IRS) should get a 1099-B reporting the sale and it will have to be reported on schedule D even if the gain/loss is zero. You will also have either a gain or loss (or unlikely, neither) on the sale of the bond fund. Its sale, also reported to you and the IRS on form 1099-B must be reported on schedule D. Your broker or the fund should provide you with help determining the basis of the shares sold.
