If you choose to amortize the premium paid on a taxable bond, you must reduce the basis of the bond by the amortized part of the premium each year over the life of the bond. If you receive nontaxable stock rights and allow them to expire, they have no basis. You will make an adequate identification if you show that certificates representing shares of stock from a lot that you bought on a certain date or for a certain price were delivered to your broker or other agent.

This is because the principle portion is a balance-sheet only transaction. For example, imagine you take out a 10-year loan for $150,000 that you need to pay both principle and interest payments on immediately. Our payments are installments of $10,000, and the first one is $8,000 in principle and $2,000 in interest (amounts made up for simplicity’s sake).

The cost of a surety bond is calculated as a small percentage of the total bond coverage amount — typically 0.5–10%. This means a $10,000 bond policy may cost between $50 and $1,000. For applicants with strong credit, most bond rates are 0.5–4% of the bond amount.

What are the factors determining surety bond cost?