Certain corporate and government bonds, if purchased between coupon payment dates, will trade with accrued interest, meaning that the purchaser pays the seller for any interest accrued since the last payment date. The purchaser, in turn, will receive that amount from the issuer on the following coupon payment date. To reflect this transaction and ensure proper tax reporting of cost basis and interest income, IBKR will post this as a negative interest purchase accrual to the Interest section of the activity statement on the purchase date. Note that this amount is fully offset by an accrual for the interest to be received from the issuer at payment date (see activity statement section titled Net Asset Value).
Note
- The accrual will be automatically converted to cash on the actual date it is paid by the issuer (typically quarterly).