How do I record the retirement of a Ginnie Mae bond?
If you hold a Ginnie Mae bond until it returns all of its principal, it becomes worthless. You need to record this information in your investment account.
- Open the account you want to use.
- Click Enter Transactions.
- In the Enter Transaction list, choose Sell - Shares Sold.
- In the Security name field, select the bond.
- In the Number of shares field, enter the face amount of the bond divided by 100.
Face amount - Also called principal or par value, the face amount of a single bond (typically $1,000) is the price of the bond before fluctuations in the market cause it to be sold for more or less than its par value.
For example, for a $250,000 bond, enter 2500.
- In the Price received field, enter 0.
- Identify the lots you want to use for this transaction.
- Should there be a capital gain or loss when retiring a Ginnie Mae bond?
If the bond was purchased at face value and the return of principal was accurately recorded, you have no capital gains or losses (except for commissions).
If the bond was purchased after issue (either above or below the face value), there may be a gain or loss.
- Should you record both Interest Income events and Return of Capital?
You record both interest income events and return of capital (which are not income and not taxable) during the life of a Ginnie Mae bond. The final payment (retirement of the bond) would be the same (interest and return of capital).