Do you own Mortgage Backed Securities (MBS)? Is the return of principal taxable? Tax help please!?
I inherited some Mortgage Backed Securities (mortgage pools, pass-thrus) that are now held for me by Fidelity. For years on the typical 15th or 20th of the month I got interest and return of principal. Fidelity has always sent me a 1099-INT that reports the interest, which I report. But this year for the 1st time, I got a 1099b which lists the principal (which I've never reported). The quantity column is 0.
Update: In 2010, these MBS are still generating principal & interest...in case there is special treatment when these things come to an end (and if there is - do you know what?)
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