European Stars and Stripes (Newspaper) - February 18, 1990, Darmstadt, Hesse Page 20 the stars and stripes sunday february 18. 1990 investor s guide by Bill Doyle q. Steal months ago i bought Zero Coupon Bond due to mature in the year 2009. At the time of Purchase i assumed i would not Hare to pay tax on the interest until the Bond matures. My reasoning was that i won t collect that interest until the Bond s maturity. Now i am informed that i must report part of the Bond s original Issue discount on my annual income tax returns and pay tax each year. Does t this mean i will pay tax on the interest twice annually and when the Bond matures a. No that would be double taxation. Things Haven t gotten that bad. At least not vet. You la pay tax each year on a portion of inc original Issue Dis count or Short the amount of interest that accumulates on that Bond during the year Tor which you file the income tax return. Here s hoping you live Long enough so thai on your 2009 return you la report Only Oid in Terest buildup that year. Over inc 20 years you will have reported and paid income tax on inc Tola amount of the Bond s interest accumulation the Oid. You won t get socked with lax again on that interest. A Zero Coupon Bond is originally issued and sold at a big Dis count a Price Way below its face value. No interest payments arc made Over the life of the Bond. Instead interest accumulates on inc Bond. When the Bondma Tures it is redeemed at face value unless the issuer defaults. Drexel sends Market Down new York. Up the Stock mar Ket headed into the presidents Day holi Day monday with a weekly loss As investors absorbed the news of the largest bankruptcy filing Ever on Wall Street. The Dow Jones Industrial average fell 13.96 Friday to close at 2635.59 for loss of 12.61 Points on the week or about 0.5 per cent. Among the broader Market averages the new York Stock Exchange composite Index fell 0.64 Points to close inc week at 183.75. Standard & poor s 500-Stock Index dropped 0.90 to 332.72. Declines led advances 1.009-837 among the 2,140 issues traded last week. Big Board volume totalled 742,964,690 shares compared with 774,980.820 a week earlier and 785,683.640 a year ago. Analysts called it a classic Case of sell the Rumor buy the fact As the Market skidded almost 30 Points monday on a combination of a weak Bond Market and talk on Wall Street that the Parent com Pany of or excl Burnham Lambert might file for bankruptcy because of a plunge in the Market for its High risk High yielding junk Bonds. The filing came tuesday night but the Dow industrials managed a Small gain tuesday even As it became More apparent that a filing was imminent. On wednesday the Market held firm in the aftermath of the Drexel filing As investors tried 1o assess How widespread any damage to the financial system might be. Bui by thursday prices rallied amid a sense of Relief the demise of the former junk Bond powerhouse was not expected to have any far ranging effects. Prices were just about even on the week at that Point but inc Dow lost 13 Points Friday accounting for the week s drop. The expiration of february Stock Index futures and options known As double witching hour sparked a late Selling spree Friday As the Market wound Down for the presidents Day Holiday monday when it will be closed. Or excl was the focus All week however and began laying off several thousand of its 5,300 employees Friday. Other Bro Kerages picked Over the remains of the Wall Street firm. Related Story Page 5. It will cease to be an operating com Pany a spokesman said of the Pioneer in the use of junk Bonds for financing giant corporate takeovers. Analysis said the Market acquitted it self Well in inc face of or excl s downfall. The judgment of the Market was that it would t have a deep effect on the financial Structure or the Economy said Gene sea Glt technical research director at Grunt and co. If it were otherwise the Market would have broken wide Scagli said speculation Over the or excl bankruptcy was in the Market. It had been talked about and worried about for a number of Days. He said the crumbling of or excl should go a Long ways in eliminating the evils produced by junk Bonds namely the High Levels of debt that push Compa Nies into dire financial Straits. I Don t think it Means the end of acquisitions or leveraged buyouts. I just Mink the Market will turn its interest to equities rather than Bonds for future financing he said with companies issuing Slock to raise Money a Alicr than Bonds. I think it s a plus for it will slow takeover activity though i think. One because it was overdone in the first place and two because the House that sponsored it is no longer around he said. Other analysts questioned How much of a Booster or excl s undoing would be for the Stock Market. All this docs is Hurt Public Confidence again said Don Hays director of invest ment strategy at wheat first securities inc. In Richmond a. And if there s one thing the Public does t need it s to have its Confidence Hurt any worse than it Al ready has on inc trading floor last week growth fund of Spain which began trading thursday was the most Active nose Issue unchanged at i2v. Citicorp followed up p/4 to 24 a. As Banks rallied thursday to Lead the mar Ket. The sector benefited from several analysis recommendations. Reader s digest which also began trading thursday was third unchanged at 21 a. 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