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Muni bond purchased at discount. Qualifies as "de minimus".

If a muni is purchased on the secondary market 10-01-2004 at 74340 (par =75000) due 12-15-2014. That is 660 market discount.

Normally the 660 would be reported as interest income. But, this qualifies as “de minimus” (660 is less than < 1875)
{one-fourth of one percent of redemption price multiplied by the number of full years after acquisition until maturity = .0025x75000x10}.

My confusion!
Since it qualifies as “de minimus”, market discount can be treated as ZERO. Does this mean there is no interest income to be reported and NO long term capital gain or does this mean no interest income and 660 long term capital gain?

Thanks,
Muni bond taxable gain.
 

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