A: Possible ways…

(1) Only interest earned on tax-exempt bonds is tax exempt. If bonds appreciate in value and are sold at a gain, taxable capital gain results, just as from any other appreciating investment.

(2) Some tax-exempt bonds pay interest that is taxable under the rules of the alternative minimum tax (AMT), a tax computation that hits more taxpayers each year. These bonds generally are so-called “private activity bonds,” issued to support projects (such as sports stadiums) that benefit private parties. Check the AMT status of bonds with their issuer before investing.

(3) Tax-exempt bonds are often purchased at a discount, with the amount of the discount taxable as ordinary interest income. Also, not all municipal bonds pay federally tax-exempt interest.

I don’t hate you. I pity you. This is our country, yours and mine. It does not matter who has the most people because Obama said it right. We are not brown people, white people, black people, red people or asian people. We are Americans. We are Americans one and all.

Avila