Prospectus supplement US007924AH66 - Aegon

the time amortizable bond premium offsets interest income, a U.S. holder realizes exchange gain or
loss (taxable as ordinary income or loss) equal to the difference between exchange rates at that time
and at the time of the acquisition of the debt securities. Any election to amortize bond premium shall
apply to all bonds (other than bonds the interest on which is excludible from gross income) held by the
U.S. holder at the beginning of the first taxable year to which the election applies or thereafter
acquired by the U.S. holder and is irrevocable without the consent of the IRS.
Sale, Exchange or Retirement of the Debt Securities
A U.S. holder’s tax basis in a debt security will generally equal its ‘‘U.S. dollar cost’’, increased by
the amount of any OID or market discount included in the U.S. holder’s income with respect to the
debt security and the amount, if any, of income attributable to de minimis OID and de minimis market
discount included in the U.S. holder’s income with respect to the debt security (each as determined
above), and reduced by the amount of any payments with respect to the debt security that are not
qualified stated interest payments and the amount of any amortizable bond premium applied to reduce
interest on the debt security. The ‘‘U.S. dollar cost’’ of a debt security purchased with a foreign
currency will generally be the U.S. dollar value of the purchase price on (1) the date of purchase or
(2) in the case of a debt security traded on an established securities market (as defined in the
applicable U.S. Treasury regulations), that is purchased by a cash basis U.S. holder (or an accrual basis
U.S. holder that so elects), on the settlement date for the purchase. A U.S. holder will generally
recognize gain or loss on the sale, exchange or retirement of a debt security equal to the difference
between the amount realized on the sale, exchange or retirement and the tax basis of the debt security.
The amount realized on the sale, exchange or retirement of a debt security for an amount in foreign
currency will be the U.S. dollar value of that amount on the date of disposition, or in the case of debt
securities traded on an established securities market (as defined in the applicable U.S. Treasury
regulations) that are sold by a cash basis U.S. holder or by an accrual basis U.S. holder that so elects,
on the settlement date for the sale.
Gain or loss recognized by a U.S. holder on the sale, exchange or retirement of a debt security
that is attributable to changes in currency exchange rates will be ordinary income or loss and will
consist of OID exchange gain or loss and principal exchange gain or loss. OID exchange gain or loss
will equal the difference between the U.S. dollar value of the amount received on the sale, exchange or
retirement of a debt security that is attributable to accrued but unpaid OID as determined by using the
exchange rate on the date of the sale, exchange or retirement and the U.S. dollar value of accrued but
unpaid OID as determined by the U.S. holder under the rules described above under ‘‘Original Issue
Discount’’. Principal exchange gain or loss will equal the difference between the U.S. dollar value of the
U.S. holder’s purchase price of the debt security in foreign currency determined on the date of the sale,
exchange or retirement, and the U.S. dollar value of the U.S. holder’s purchase price of the debt
security in foreign currency determined on the date the U.S. holder acquired the debt security. The
foregoing foreign currency gain or loss will be recognized only to the extent of the total gain or loss
realized by the U.S. holder on the sale, exchange or retirement of the debt security, and will generally
be treated as from sources within the United States for U.S. foreign tax credit limitation purposes.
Any gain or loss recognized by a U.S. holder in excess of foreign currency gain recognized on the
sale, exchange or retirement of a debt security would generally be U.S. source capital gain or loss
(except to the extent such amounts are attributable to market discount, accrued but unpaid interest, or
subject to the general rules governing contingent payment obligations). Prospective investors should
consult their own tax advisors with respect to the treatment of capital gains (which may be taxed at
lower rates than ordinary income for taxpayers who are individuals, trusts or estates that held the
debt securities for more than one year) and capital losses (the deductibility of which is subject to
limitations).
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