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Hello Eric,
As you mentioned, Footnote 7 of SSAP 26R is focused on situations where the consideration received is less than par but greater than the book adjusted carrying value. In your description, the tender off you describe is less than both PAR and the BACV. So, it doesn?t appear this footnote would be applicable.
Paragraph 17 of SSAP 26R describes the situations when an amount of prepayment penalty or acceleration fees should be reported as investment income. Based on my limited understanding of your situation, it doesn?t appear your situation fits either situation described in 17a or 17b.
The IMR instructions indicate interest related realized gains and losses on tendered bonds should be included in IMR.
Depending on the materiality of the transaction, you may want to confirm the treatment with your outside auditor.
Regards,
Lisa Mullen
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