amortized basis

  • A method of valuing bonds by means of which the premium or the discount involved in the purchase of a bond is extinguished by periodically charging off a portion of the premium or crediting a portion of the discount so as to bring the value to par at maturity. Amortized values are computed by means of special formulae devised for the purpose.

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).