Taxation of Bond INCOME - individual vs corporation

CFA Level I Fixed Income
#1

Dear all,

I am in the midst of reading AR#52- Fixed Income Securities: Defining Elements and I have one question.

I understand from the Schwesers Notes that bond income is most often taxed at the same rate as wage and salary income. I understand this from the perspective of individual bond-holder. How about from the perspective of corporation as the bond holder i.e. Company A buy the bond issued by Company B; the income received (e.g. interest) are taxed the same manner as individual bond-holder or otherwise?

Thanks.

Cheers,

Ernest

#2

I’d imagine that it’s taxed at the corporate tax rate. I don’t recall hearing of differing tax rates for different kinds of corporate income.

#3

awesome, thanks S2000magician.

#4

My pleasure.

On the exam, if they should want you to use a different tax rate for interest income, they’d have to give it to you in that problem.