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Here’s a way to buy yourself ‘time’ on taxable investments

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in Small Business Tax

It’s time for investors to spring into action now that the year is half over.

Strategy: Buy T-bills or certificates of deposit (CDs) with six-month maturities that come due in early 2007. The interest from such short-term investments isn’t subject to federal income tax until the instrument matures next year.

Note: You can defer the tax on T-bills or CDs with maturities of one year or less until they mature. On the other hand, most other debt instruments require you to report accrued interest as original issue discount (OID). You must pay tax annually on OID even though you don’t actually receive any interest.

Tip: You can invest in T-bills or CDs within a qualified retirement plan or IRA at any time without worrying about the maturity dates or the OID rules.

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