Capital loss on inherited muni bond?



Taxpayer inherited a tax-free muni bond in 1986, and held it
to maturity. The bond matured in June, 2003.

The bond's fair market value when inherited was 10,800. The
face value received at maturity was 10,000.

If the muni bond had been purchased by the taxpayer at a
premium, I realize that there wouldn't be any capital gain
or loss on Schedule D because of the amortization rule. Does
the same rule apply to an inherited muni bond?


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