How do I: Figure the tax on TIPS (Treasury Inflation-Protected Securities)?
With the prices of energy and food leading to rising inflation in the U.S., many people are looking to an old stand-by for their investment options: Treasury Securities; as well as a relatively new variation, Treasury-Inflation Protected Securities (TIPS). TIPS are special types of Treasury notes or bonds that offer protection from inflation by tying their principal to the Consumer Price Index (CPI). With inflation, the principal increases. With deflation, it decreases. When the security matures, the U.S. Treasury pays the original or adjusted principal, whichever is greater.
