CA state tax on capital gains from sale of treasuries

[anoop]

I have a 2 year t-note maturing 11/30/2024 @4.5%. It is worth about 0.86% over face value. A couple of questions:

- Would that entire amount (0.86% * face value) be treated as capital gains, or is there some complicated formula to determine what part is interest vs capital gain?

-- I mainly want to use the gain to offset a capital loss carryover (much bigger than this and much bigger than $3K plus this gain) to maybe save some taxes on the interest payouts. Are the capital gains (losses) from sale of treasuries subject to state tax in CA?

- Am I getting myself into a mess by doing this? :)

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[John Levine]

It appears that anoop <ghan...@gmail.com> said:
>I have a 2 year t-note maturing 11/30/2024 @4.5%. It is worth about 0.86% over face value. A couple of questions:

Are you planning to sell it now, or wait and let it mature?

>- Would that entire amount (0.86% * face value) be treated as capital gains, or is there some complicated formula to determine what
>part is interest vs capital gain?

Unless you sell it on the day they pay interest, some part of the sale
price is the interest acccrued but not yet paid.

My broker offers me 10 of those notes for $10,103 principal plus $145.88 accrued interest,
total $10,248.88.

>-- I mainly want to use the gain to offset a capital loss carryover (much bigger than this and much bigger than $3K plus this gain) to
>maybe save some taxes on the interest payouts. Are the capital gains (losses) from sale of treasuries subject to state tax in CA?

The interest is exempt from state taxes but capitals gains and losses are not.

>- Am I getting myself into a mess by doing this? :)

Since they're so close to maturity it seems like a lot of hassle for
modest benefit. If you hold on and let them mature, all of the
interest is CA exempt and if you bought them at par, there'll be no
gain.


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Please consider the environment before reading this e-mail. https://jl.ly

[anoop]

On Saturday, March 25, 2023 at 12:42:55 AM UTC-7, John Levine wrote:
> It appears that anoop <ghan...@gmail.com> said:
> >I have a 2 year t-note maturing 11/30/2024 @4.5%. It is worth about 0.86% over face value. A couple of questions:
> Are you planning to sell it now, or wait and let it mature?
> >- Would that entire amount (0.86% * face value) be treated as capital gains, or is there some complicated formula to determine what
> >part is interest vs capital gain?
> Unless you sell it on the day they pay interest, some part of the sale
> price is the interest acccrued but not yet paid.
>
> My broker offers me 10 of those notes for $10,103 principal plus $145.88 accrued interest,
> total $10,248.88.
> >-- I mainly want to use the gain to offset a capital loss carryover (much bigger than this and much bigger than $3K plus this gain) to
> >maybe save some taxes on the interest payouts. Are the capital gains (losses) from sale of treasuries subject to state tax in CA?
> The interest is exempt from state taxes but capitals gains and losses are not.
> >- Am I getting myself into a mess by doing this? :)
> Since they're so close to maturity it seems like a lot of hassle for
> modest benefit. If you hold on and let them mature, all of the
> interest is CA exempt and if you bought them at par, there'll be no
> gain.

Thanks. 2-year yields back up sharply today making the transaction pointless, but I appreciate the response and am now prepared to act if such an opportunity were to arise again.