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Marginally exempt from the AMT


Some muni bonds are not subject to the Alternative Minimum Tax. If an individual is marginally exempt, how much difference in bond prices would be found when trading exempt vs. non-exempt on average? This appears to be a factor until Congress revises exemptions.

R.P., Florida


James A. Klotz responds:

The difference in yield between AMT and non-AMT bonds would depend on their maturity dates. On long-term bonds, the difference would be approximately 20 basis points. On short and intermediate bonds, the difference could be as much as 35 basis points.

Jan 6, 2005

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