| Year | Realized interest income from discount | Cost basis of bonds |
|---|---|---|
| 1 | $0 | $80,000 |
| 2 | $0 | $80,000 |
| 3 | $0 | $80,000 |
| 4 | $0 | $80,000 |
| 5 | $20,000 | $100,000 |
Disclosure Title
Source:
Disclosure
Charles Schwab Investment Advisory, Inc.
For illustrative purposes only. The example assumes the taxable income from the discount and accretion are recognized using the ratable accrual method, a formula for determining taxes on interest income in a given period.