Municipal bond question

That’s what I thought too but it’s not right. From IRS website: "When you buy a market discount bond, you can choose to accrue the market discount over the period you own the bond and include it in your income currently as interest income. If you do not make this choice, the following rules generally apply. You must treat any gain when you dispose of the bond as ordinary interest income, up to the amount of the accrued market discount. See Discounted Debt Instruments under Capital Gains and Losses in chapter 4. You must treat any partial payment of principal on the bond as ordinary interest income, up to the amount of the accrued market discount. See Partial principal payments, later in this discussion. " So the deal is that suppose there are 6 years left to maturity and it wasn’t an OID bond. The discount is 60 so you straight line that (it looks like you dont have to) and the discount should accrue at 10/yr. When you sell it at 80, 20 of it is taxed as ordinary income and the other 20 is taxed as long-term capital gain. I think that is completely unfair. If the bond goes to 0, you can’t deduct the losses from income after $3500 (or whatever is the number these days).