So, in the FINRA example from the intro, the $6,500 difference between what you paid for the zero-coupon bond ($3,500) and what was received at maturity ($10,000) is taxable in 20 prorated annual amounts of $325.

Source: https://investorplace.com/2023/08/supercharge-your-ira-3-reasons-why-treasury-strips-could-be-your-next-smart-move/

These investments are well-liked amongst sure buyers, partly on account of their availability in particular actual property markets and in addition as a result of zero-coupon bonds promote at a reduction from the face worth of the be aware.

Source: https://www.mccourier.com/zero-coupon-mortgage-definition/