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H&r Block File Online

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H&r block file online Publication 901 - Additional Material Table of Contents How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). H&r block file online How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. H&r block file online By selecting the method that is best for you, you will have quick and easy access to tax help. H&r block file online Free help with your tax return. H&r block file online   Free help in preparing your return is available nationwide from IRS-certified volunteers. H&r block file online The Volunteer Income Tax Assistance (VITA) program is designed to help low-moderate income, elderly, disabled, and limited English proficient taxpayers. H&r block file online The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. H&r block file online Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. H&r block file online Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. H&r block file online To find the nearest VITA or TCE site, visit IRS. H&r block file online gov or call 1-800-906-9887 or 1-800-829-1040. H&r block file online   As part of the TCE program, AARP offers the Tax-Aide counseling program. H&r block file online To find the nearest AARP Tax-Aide site, visit AARP's website at www. H&r block file online aarp. H&r block file online org/money/taxaide or call 1-888-227-7669. H&r block file online   For more information on these programs, go to IRS. H&r block file online gov and enter “VITA” in the search box. H&r block file online Internet. H&r block file online You can access the IRS website at IRS. H&r block file online gov 24 hours a day, 7 days a week to: E-file your return. H&r block file online Find out about commercial tax preparation and e-file services available free to eligible taxpayers. H&r block file online Check the status of your 2012 refund. H&r block file online Go to IRS. H&r block file online gov and click on Where’s My Refund. H&r block file online Information about your return will generally be available within 24 hours after the IRS receives your e-filed return, or 4 weeks after you mail your paper return. H&r block file online If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). H&r block file online Have your 2012 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. H&r block file online Where's My Refund? has a new look this year! The tool will include a tracker that displays progress through three stages: (1) return received, (2) refund approved, and (3) refund sent. H&r block file online Where's My Refund? will provide an actual personalized refund date as soon as the IRS processes your tax return and approves your refund. H&r block file online So in a change from previous filing seasons, you won't get an estimated refund date right away. H&r block file online Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. H&r block file online You can obtain a free transcript online at IRS. H&r block file online gov by clicking on Order a Return or Account Transcript under “Tools. H&r block file online ” For a transcript by phone, call 1-800-908-9946 and follow the prompts in the recorded message. H&r block file online You will be prompted to provide your SSN or Individual Taxpayer Identification Number (ITIN), date of birth, street address and ZIP code. H&r block file online Download forms, including talking tax forms, instructions, and publications. H&r block file online Order IRS products. H&r block file online Research your tax questions. H&r block file online Search publications by topic or keyword. H&r block file online Use the Internal Revenue Code, regulations, or other official guidance. H&r block file online View Internal Revenue Bulletins (IRBs) published in the last few years. H&r block file online Figure your withholding allowances using the IRS Withholding Calculator at www. H&r block file online irs. H&r block file online gov/individuals. H&r block file online Determine if Form 6251 (Alternative Minimum Tax— Individuals), must be filed by using our Alternative Minimum Tax (AMT) Assistant available at IRS. H&r block file online gov by typing Alternative Minimum Tax Assistant in the search box. H&r block file online Sign up to receive local and national tax news by email. H&r block file online Get information on starting and operating a small business. H&r block file online Phone. H&r block file online Many services are available by phone. H&r block file online   Ordering forms, instructions, and publications. H&r block file online Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions (limited to 5 years). H&r block file online You should receive your order within 10 days. H&r block file online Asking tax questions. H&r block file online Call the IRS with your tax questions at 1-800-829-1040. H&r block file online Solving problems. H&r block file online You can get face-to-face help solving tax problems most business days in IRS Taxpayer Assistance Centers (TAC). H&r block file online An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. H&r block file online Call your local Taxpayer Assistance Center for an appointment. H&r block file online To find the number, go to www. H&r block file online irs. H&r block file online gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. H&r block file online TTY/TDD equipment. H&r block file online If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. H&r block file online The TTY/TDD telephone number is for individuals who are deaf, hard of hearing, or have a speech disability. H&r block file online These individuals can also access the IRS through relay services such as the Federal Relay Service at www. H&r block file online gsa. H&r block file online gov/fedrelay. H&r block file online TeleTax topics. H&r block file online Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. H&r block file online Checking the status of your 2012 refund. H&r block file online To check the status of your 2012 refund, call 1-800-829-1954 or 1-800-829-4477 (automated Where's My Refund? information 24 hours a day, 7 days a week). H&r block file online Information about your return will generally be available within 24 hours after the IRS receives your e-filed return, or 4 weeks after you mail your paper return. H&r block file online If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). H&r block file online Have your 2012 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. H&r block file online Where's My Refund? will provide an actual personalized refund date as soon as the IRS processes your tax return and approves your refund. H&r block file online Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. H&r block file online Evaluating the quality of our telephone services. H&r block file online To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. H&r block file online One method is for a second IRS representative to listen in on or record random telephone calls. H&r block file online Another is to ask some callers to complete a short survey at the end of the call. H&r block file online Walk-in. H&r block file online Some products and services are available on a walk-in basis. H&r block file online   Products. H&r block file online You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. H&r block file online Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. H&r block file online Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. H&r block file online Services. H&r block file online You can walk in to your local TAC most business days for personal, face-to-face tax help. H&r block file online An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. H&r block file online If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. H&r block file online No appointment is necessary—just walk in. H&r block file online Before visiting, check www. H&r block file online irs. H&r block file online gov/localcontacts for hours of operation and services provided. H&r block file online If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested by calling your local TAC. H&r block file online You can leave a message and a representative will call you back within 2 business days. H&r block file online All other issues will be handled without an appointment. H&r block file online To call your local TAC, go to  www. H&r block file online irs. H&r block file online gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. H&r block file online Mail. H&r block file online You can send your order for forms, instructions, and publications to the address below. H&r block file online You should receive a response within 10 days after your request is received. H&r block file online  Internal Revenue Service 1201 N. H&r block file online Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. H&r block file online   The Taxpayer Advocate Service (TAS) is your voice at the IRS. H&r block file online Its job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. H&r block file online TAS offers free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. H&r block file online Remember, the worst thing you can do is nothing at all. H&r block file online   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. H&r block file online You face (or your business is facing) an immediate threat of adverse action. H&r block file online You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. H&r block file online   If you qualify for help, they will do everything they can to get your problem resolved. H&r block file online You will be assigned to one advocate who will be with you at every turn. H&r block file online TAS has offices in every state, the District of Columbia, and Puerto Rico. H&r block file online Although TAS is independent within the IRS, their advocates know how to work with the IRS to get your problems resolved. H&r block file online And its services are always free. H&r block file online   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. H&r block file online The TAS tax toolkit at www. H&r block file online TaxpayerAdvocate. H&r block file online irs. H&r block file online gov can help you understand these rights. H&r block file online   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. H&r block file online irs. H&r block file online gov/advocate. H&r block file online You can also call the toll-free number at 1-877-777-4778. H&r block file online Deaf and hard of hearing individuals who have access to TTY/TDD equipment can call 1-800-829-4059. H&r block file online These individuals can also access the IRS through relay services such as the Federal Relay Service at www. H&r block file online gsa. H&r block file online gov/fedrelay. H&r block file online   TAS also handles large-scale or systemic problems that affect many taxpayers. H&r block file online If you know of one of these broad issues, please report it through the Systemic Advocacy Management System at www. H&r block file online irs. H&r block file online gov/advocate. H&r block file online Low Income Taxpayer Clinics (LITCs). H&r block file online   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. H&r block file online Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. H&r block file online These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. H&r block file online Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. H&r block file online For more information and to find a clinic near you, see the LITC page on www. H&r block file online irs. H&r block file online gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. H&r block file online This publication is also available by calling 1-800-TAX-FORM (1-800-829-3676) or at your local IRS office. H&r block file online Free tax services. H&r block file online   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. H&r block file online Learn about free tax information from the IRS, including publications, services, and education and assistance programs. H&r block file online The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. H&r block file online The majority of the information and services listed in this publication are available to you free of charge. H&r block file online If there is a fee associated with a resource or service, it is listed in the publication. H&r block file online   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. H&r block file online DVD for tax products. H&r block file online You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. H&r block file online Prior-year forms, instructions, and publications. H&r block file online Tax Map: an electronic research tool and finding aid. H&r block file online Tax law frequently asked questions. H&r block file online Tax Topics from the IRS telephone response system. H&r block file online Internal Revenue Code—Title 26 of the U. H&r block file online S. H&r block file online Code. H&r block file online Links to other Internet-based tax research materials. H&r block file online Fill-in, print, and save features for most tax forms. H&r block file online Internal Revenue Bulletins. H&r block file online Toll-free and email technical support. H&r block file online Two releases during the year. H&r block file online  – The first release will ship the beginning of January 2013. H&r block file online  – The final release will ship the beginning of March 2013. H&r block file online Purchase the DVD from National Technical Information Service (NTIS) at www. H&r block file online irs. H&r block file online gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). H&r block file online Prev  Up  Next   Home   More Online Publications



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H&r block file online Publication 1212 - Main Content Table of Contents Definitions Debt Instruments on the OID List Debt Instruments Not on the OID List Information for Brokers and Other MiddlemenShort-Term Obligations Redeemed at Maturity Long-Term Debt Instruments Certificates of Deposit Bearer Bonds and Coupons Backup Withholding Information for Owners of OID Debt InstrumentsExceptions. H&r block file online Adjustment for premium. H&r block file online Adjustment for acquisition premium. H&r block file online Adjustment for market discount. H&r block file online Form 1099-OID How To Report OID Figuring OID on Long-Term Debt Instruments Figuring OID on Stripped Bonds and Coupons How To Get Tax HelpLow Income Taxpayer Clinics Definitions The following terms are used throughout this publication. H&r block file online “Original issue discount” is defined first. H&r block file online The other terms are listed alphabetically. H&r block file online Original issue discount (OID). H&r block file online   OID is a form of interest. H&r block file online It is the excess of a debt instrument's stated redemption price at maturity over its issue price (acquisition price for a stripped bond or coupon). H&r block file online Zero coupon bonds and debt instruments that pay no stated interest until maturity are examples of debt instruments that have OID. H&r block file online Accrual period. H&r block file online   An accrual period is an interval of time used to measure OID. H&r block file online The length of an accrual period can be 6 months, a year, or some other period, depending on when the debt instrument was issued. H&r block file online Acquisition premium. H&r block file online   Acquisition premium is the excess of a debt instrument's adjusted basis immediately after purchase, including purchase at original issue, over the debt instrument's adjusted issue price at that time. H&r block file online A debt instrument does not have acquisition premium, however, if the debt instrument was purchased at a premium. H&r block file online See Premium, later. H&r block file online Adjusted issue price. H&r block file online   The adjusted issue price of a debt instrument at the beginning of an accrual period is used to figure the OID allocable to that period. H&r block file online In general, the adjusted issue price at the beginning of the debt instrument's first accrual period is its issue price. H&r block file online The adjusted issue price at the beginning of any subsequent accrual period is the sum of the issue price and all the OID includible in income before that accrual period minus any payment previously made on the debt instrument, other than a payment of qualified stated interest. H&r block file online Debt instrument. H&r block file online   The term “debt instrument” means any instrument or contractual arrangement that constitutes indebtedness under general principles of federal income tax law (including, for example, a bond, debenture, note, certificate, or other evidence of indebtedness). H&r block file online It generally does not include an annuity contract. H&r block file online Issue price. H&r block file online   For debt instruments listed in Section I-A and Section I-B, the issue price generally is the initial offering price to the public (excluding bond houses and brokers) at which a substantial amount of these instruments was sold. H&r block file online Market discount. H&r block file online   Market discount arises when a debt instrument purchased in the secondary market has decreased in value since its issue date, generally because of an increase in interest rates. H&r block file online An OID debt instrument has market discount if your adjusted basis in the debt instrument immediately after you acquired it (usually its purchase price) was less than the debt instrument's issue price plus the total OID that accrued before you acquired it. H&r block file online The market discount is the difference between the issue price plus accrued OID and your adjusted basis. H&r block file online Premium. H&r block file online   A debt instrument is purchased at a premium if its adjusted basis immediately after purchase is greater than the total of all amounts payable on the debt instrument after the purchase date, other than qualified stated interest. H&r block file online The premium is the excess of the adjusted basis over the payable amounts. H&r block file online See Publication 550 for information on the tax treatment of bond premium. H&r block file online Qualified stated interest. H&r block file online   In general, qualified stated interest is stated interest that is unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually over the term of the debt instrument at a single fixed rate. H&r block file online Stated redemption price at maturity. H&r block file online   A debt instrument's stated redemption price at maturity is the sum of all amounts (principal and interest) payable on the debt instrument other than qualified stated interest. H&r block file online Yield to maturity (YTM). H&r block file online   In general, the YTM is the discount rate that, when used in figuring the present value of all principal and interest payments, produces an amount equal to the issue price of the debt instrument. H&r block file online The YTM is generally shown on the face of the debt instrument or in the literature you receive from your broker. H&r block file online If you do not have this information, consult your broker, tax advisor, or the issuer. H&r block file online Debt Instruments on the OID List The OID list on the IRS website can be used by brokers and other middlemen to prepare information returns. H&r block file online If you own a listed debt instrument, you generally should not rely on the information in the OID list to determine (or compare) the OID to be reported on your tax return. H&r block file online The OID amounts listed are figured without reference to the price or date at which you acquired the debt instrument. H&r block file online For information about determining the OID to be reported on your tax return, see the instructions for figuring OID under Information for Owners of OID Debt Instruments, later. H&r block file online The following discussions explain what information is contained in each section of the list. H&r block file online Section I. H&r block file online   This section contains publicly offered, long-term debt instruments. H&r block file online Section I-A: Corporate Debt Instruments Issued Before 1985. H&r block file online Section I-B: Corporate Debt Instruments Issued After 1984. H&r block file online Section I-C: Inflation-Indexed Debt Instruments. H&r block file online For each publicly offered debt instrument in Section I, the list contains the following information. H&r block file online The name of the issuer. H&r block file online The Committee on Uniform Security Identification Procedures (CUSIP) number. H&r block file online The issue date. H&r block file online The maturity date. H&r block file online The issue price expressed as a percent of principal or of stated redemption price at maturity. H&r block file online The annual stated or coupon interest rate. H&r block file online (This rate is shown as 0. H&r block file online 00 if no annual interest payments are provided. H&r block file online ) The yield to maturity will be added to Section I-B for bonds issued after December 31, 2006. H&r block file online The total OID accrued up to January 1 of a calendar year. H&r block file online (This information is not available for every instrument. H&r block file online ) For long-term debt instruments issued after July 1, 1982, the daily OID for the accrual periods falling in a calendar year and a subsequent year. H&r block file online The total OID per $1,000 of principal or maturity value for a calendar year and a subsequent year. H&r block file online Section II. H&r block file online   This section contains stripped coupons and principal components of U. H&r block file online S. H&r block file online Treasury and Government-Sponsored Enterprise debt instruments. H&r block file online These stripped components are available through the Department of the Treasury's Separate Trading of Registered Interest and Principal of Securities (STRIPS) program and government-sponsored enterprises such as the Resolution Funding Corporation. H&r block file online This section also includes debt instruments backed by U. H&r block file online S. H&r block file online Treasury securities that represent ownership interests in those securities. H&r block file online   The obligations listed in Section II are arranged by maturity date. H&r block file online The amounts listed are the total OID for a calendar year per $1,000 of redemption price. H&r block file online Section III. H&r block file online   This section contains short-term discount obligations. H&r block file online Section III-A: Short-Term U. H&r block file online S. H&r block file online Treasury Bills. H&r block file online Section III-B: Federal Home Loan Banks. H&r block file online Section III-C: Federal National Mortgage Association. H&r block file online Section III-D: Federal Farm Credit Banks. H&r block file online Section III-E: Federal Home Loan Mortgage Corporation. H&r block file online Section III-F: Federal Agricultural Mortgage Corporation. H&r block file online    Information that supplements Section III-A is available on the Internet at http://www. H&r block file online treasurydirect. H&r block file online gov/tdhome. H&r block file online htm. H&r block file online   The short-term obligations listed in this section are arranged by maturity date. H&r block file online For each obligation, the list contains the CUSIP number, maturity date, issue date, issue price (expressed as a percent of principal), and discount to be reported as interest for a calendar year per $1,000 of redemption price. H&r block file online Brokers and other middlemen should rely on the issue price information in Section III only if they are unable to determine the price actually paid by the owner. H&r block file online Debt Instruments Not on the OID List The list of debt instruments discussed earlier does not contain the following items. H&r block file online U. H&r block file online S. H&r block file online savings bonds. H&r block file online Certificates of deposit and other face-amount certificates issued at a discount, including syndicated certificates of deposit. H&r block file online Obligations issued by tax-exempt organizations. H&r block file online OID debt instruments that matured or were entirely called by the issuer before the tables were posted on the IRS website. H&r block file online Mortgage-backed securities and mortgage participation certificates. H&r block file online Long-term OID debt instruments issued before May 28, 1969. H&r block file online Short-term obligations, other than the obligations listed in Section III. H&r block file online Debt instruments issued at a discount by states or their political subdivisions. H&r block file online REMIC regular interests and CDOs. H&r block file online Commercial paper and banker's acceptances issued at a discount. H&r block file online Obligations issued at a discount by individuals. H&r block file online Foreign obligations not traded in the United States and obligations not issued in the United States. H&r block file online Information for Brokers and Other Middlemen The following discussions contain specific instructions for brokers and middlemen who hold or redeem a debt instrument for the owner. H&r block file online In general, you must file a Form 1099 for the debt instrument if the interest or OID to be included in the owner's income for a calendar year totals $10 or more. H&r block file online You also must file a Form 1099 if you were required to deduct and withhold tax, even if the interest or OID is less than $10. H&r block file online See Backup Withholding, later. H&r block file online If you must file a Form 1099, furnish a copy to the owner of the debt instrument by January 31 in the year it is due. H&r block file online File all your Forms 1099 with the IRS, accompanied by Form 1096, by February 28 in the year it is due (March 31 if you file electronically). H&r block file online Electronic payee statements. H&r block file online   You can issue Form 1099-OID electronically with the consent of the recipient. H&r block file online More information. H&r block file online   For more information, including penalties for failure to file (or furnish) required information returns or statements, see the General Instructions for Certain Information Returns (Forms 1098, 1099, 3921, 3922, 5498, and W-2G) for the appropriate calendar year. H&r block file online Short-Term Obligations Redeemed at Maturity If you redeem a short-term discount obligation for the owner at maturity, you must report the discount as interest on Form 1099-INT. H&r block file online To figure the discount, use the purchase price shown on the owner's copy of the purchase confirmation receipt or similar record, or the price shown in your transaction records. H&r block file online If you sell the obligation for the owner before maturity, you must file Form 1099-B to reflect the gross proceeds to the seller. H&r block file online Do not report the accrued discount to the date of sale on either Form 1099-INT or Form 1099-OID. H&r block file online If the owner's purchase price cannot be determined, figure the discount as if the owner had purchased the obligation at its original issue price. H&r block file online A special rule is used to determine the original issue price for information reporting on U. H&r block file online S. H&r block file online Treasury bills (T-bills) listed in Section III-A. H&r block file online Under this rule, you treat as the original issue price of the T-bill the noncompetitive (weighted average of accepted auction bids) discount price for the longest-maturity T-bill maturing on the same date as the T-bill being redeemed. H&r block file online This noncompetitive discount price is the issue price (expressed as a percent of principal) shown in Section III-A. H&r block file online A similar rule is used to figure the discount on short-term discount obligations issued by the organizations listed in Section III-B through Section III-F. H&r block file online Example 1. H&r block file online There are 13-week and 26-week T-bills maturing on the same date as the T-bill being redeemed. H&r block file online The price actually paid by the owner cannot be established by owner or middleman records. H&r block file online You treat as the issue price of the T-bill the noncompetitive discount price (expressed as a percent of principal) shown in Section III-A for a 26-week bill maturing on the same date as the T-bill redeemed. H&r block file online The interest you report on Form 1099-INT is the OID (per $1,000 of principal) shown in Section III-A for that obligation. H&r block file online Long-Term Debt Instruments If you hold a long-term OID debt instrument as a nominee for the true owner, you generally must file Form 1099-OID. H&r block file online For this purpose, you can rely on Section I of the OID list to determine the following information. H&r block file online Whether a debt instrument has OID. H&r block file online The OID to be reported on the Form 1099-OID. H&r block file online In general, you must report OID on publicly offered, long-term debt instruments listed in Section I. H&r block file online You also can report OID on other long-term debt instruments. H&r block file online Form 1099-OID. H&r block file online   On Form 1099-OID for a calendar year show the following information. H&r block file online Box 1. H&r block file online The OID for the actual dates the owner held the debt instruments during a calendar year. H&r block file online To determine this amount, see Figuring OID, next. H&r block file online Box 2. H&r block file online The qualified stated interest paid or credited during the calendar year. H&r block file online Interest reported here is not reported on Form 1099-INT. H&r block file online The qualified stated interest on Treasury inflation-protected securities may be reported on Form 1099-INT in box 3 instead. H&r block file online Box 3. H&r block file online Any interest or principal forfeited because of an early withdrawal that the owner can deduct from gross income. H&r block file online Do not reduce the amounts in boxes 1 and 2 by the forfeiture. H&r block file online Box 4. H&r block file online Any backup withholding for this debt instrument. H&r block file online Box 7. H&r block file online The CUSIP number, if any. H&r block file online If there is no CUSIP number, give a description of the debt instrument, including the abbreviation for the stock exchange, the abbreviation used by the stock exchange for the issuer, the coupon rate, and the year of maturity (for example, NYSE XYZ 12. H&r block file online 50 2006). H&r block file online If the issuer of the debt instrument is other than the payer, show the name of the issuer in this box. H&r block file online Box 8. H&r block file online The OID on a U. H&r block file online S. H&r block file online Treasury obligation for the part of the year the owner held the debt instrument. H&r block file online Box 9. H&r block file online Investment expenses passed on to holders of a single-class REMIC. H&r block file online Boxes 10-12. H&r block file online Use to report any state income tax withheld for this debt instrument. H&r block file online Figuring OID. H&r block file online   You can determine the OID on a long-term debt instrument by using either of the following. H&r block file online Section I of the OID list. H&r block file online The income tax regulations. H&r block file online Using Section I. H&r block file online   If the owner held the debt instrument for the entire calendar year, report the OID shown in Section I for the calendar year. H&r block file online Because OID is listed for each $1,000 of stated redemption price at maturity, you must adjust the listed amount to reflect the debt instrument's actual stated redemption price at maturity. H&r block file online For example, if the debt instrument's stated redemption price at maturity is $500, report one-half the listed OID. H&r block file online   If the owner held the debt instrument for less than the entire calendar year, figure the OID to report as follows. H&r block file online Look up the daily OID for the first accrual period in the calendar year during which the owner held the debt instrument. H&r block file online Multiply the daily OID by the number of days the owner held the debt instrument during that accrual period. H&r block file online Repeat steps (1) and (2) for any remaining accrual periods for the year during which the owner held the debt instrument. H&r block file online Add the results in steps (2) and (3) to determine the owner's OID per $1,000 of stated redemption price at maturity. H&r block file online If necessary, adjust the OID in (4) to reflect the debt instrument's stated redemption price at maturity. H&r block file online Report the result on Form 1099-OID in box 1. H&r block file online Using the income tax regulations. H&r block file online   Instead of using Section I to figure OID, you can use the regulations under sections 1272 through 1275 of the Internal Revenue Code. H&r block file online For example, under the regulations, you can use monthly accrual periods in figuring OID for a debt instrument issued after April 3, 1994, that provides for monthly payments. H&r block file online (If you use Section I-B, the OID is figured using 6-month accrual periods. H&r block file online )   For a general explanation of the rules for figuring OID under the regulations, see Figuring OID on Long-Term Debt Instruments under Information for Owners of OID Debt Instruments, later. H&r block file online Certificates of Deposit If you hold a bank certificate of deposit (CD) as a nominee, you must determine whether the CD has OID and any OID includible in the income of the owner. H&r block file online You must file an information return showing the reportable interest and OID, if any, on the CD. H&r block file online These rules apply whether or not you sold the CD to the owner. H&r block file online Report OID on a CD in the same way as OID on other debt instruments. H&r block file online See Short-Term Obligations Redeemed at Maturity and Long-Term Debt Instruments, earlier. H&r block file online Bearer Bonds and Coupons If a coupon from a bearer bond is presented to you for collection before the bond matures, you generally must report the interest on Form 1099-INT. H&r block file online However, do not report the interest if either of the following apply. H&r block file online You hold the bond as a nominee for the true owner. H&r block file online The payee is a foreign person. H&r block file online See Payments to foreign person under Backup Withholding, later. H&r block file online Because you cannot assume the presenter of the coupon also owns the bond, you should not report OID on the bond on Form 1099-OID. H&r block file online The coupon may have been “stripped” (separated) from the bond and separately purchased. H&r block file online However, if a long-term bearer bond on the OID list is presented to you for redemption upon call or maturity, you should prepare a Form 1099-OID showing the OID for that calendar year, as well as any coupon interest payments collected at the time of redemption. H&r block file online Backup Withholding If you report OID on Form 1099-OID or interest on Form 1099-INT for a calendar year, you may be required to apply backup withholding to the reportable payment at a rate of 28%. H&r block file online The backup withholding is deducted at the time a cash payment is made. H&r block file online See Pub. H&r block file online 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), for more information. H&r block file online Backup withholding generally applies in the following situations. H&r block file online The payee does not give you a taxpayer identification number (TIN). H&r block file online The IRS notifies you that the payee gave an incorrect TIN. H&r block file online The IRS notifies you that the payee is subject to backup withholding due to payee underreporting. H&r block file online For debt instruments acquired after 1983: The payee does not certify, under penalties of perjury, that he or she is not subject to backup withholding under (3), or The payee does not certify, under penalties of perjury, that the TIN given is correct. H&r block file online However, for short-term discount obligations (other than government obligations), bearer bonds and coupons, and U. H&r block file online S. H&r block file online savings bonds, backup withholding applies only if the payee does not give you a TIN or gives you an obviously incorrect number for a TIN. H&r block file online Short-term obligations. H&r block file online   Backup withholding applies to OID on a short-term obligation only when the OID is paid at maturity. H&r block file online However, backup withholding applies to any interest payable before maturity when the interest is paid or credited. H&r block file online   If the owner of a short-term obligation at maturity is not the original owner and can establish the purchase price of the obligation, the amount subject to backup withholding must be determined by treating the purchase price as the issue price. H&r block file online However, you can choose to disregard that price if it would require significant manual intervention in the computer or recordkeeping system used for the obligation. H&r block file online If the purchase price of a listed obligation is not established or is disregarded, you must use the issue price shown in Section III. H&r block file online Long-term obligations. H&r block file online   If no cash payments are made on a long-term obligation before maturity, backup withholding applies only at maturity. H&r block file online The amount subject to backup withholding is the OID includible in the owner's gross income for the calendar year when the obligation matures. H&r block file online The amount to be withheld is limited to the cash paid. H&r block file online Registered long-term obligations with cash payments. H&r block file online   If a registered long-term obligation has cash payments before maturity, backup withholding applies when a cash payment is made. H&r block file online The amount subject to backup withholding is the total of the qualified stated interest (defined earlier under Definitions) and OID includible in the owner's gross income for the calendar year when the payment is made. H&r block file online If more than one cash payment is made during the year, the OID subject to withholding for the year must be allocated among the expected cash payments in the ratio that each bears to the total of the expected cash payments. H&r block file online For any payment, the required withholding is limited to the cash paid. H&r block file online Payee not the original owner. H&r block file online   If the payee is not the original owner of the obligation, the OID subject to backup withholding is the OID includible in the gross income of all owners during the calendar year (without regard to any amount paid by the new owner at the time of transfer). H&r block file online The amount subject to backup withholding at maturity of a listed obligation must be determined using the issue price shown in Section I. H&r block file online Bearer long-term obligations with cash payments. H&r block file online   If a bearer long-term obligation has cash payments before maturity, backup withholding applies when the cash payments are made. H&r block file online For payments before maturity, the amount subject to withholding is the qualified stated interest (defined earlier under Definitions) includible in the owner's gross income for the calendar year. H&r block file online For a payment at maturity, the amount subject to withholding is only the total of any qualified stated interest paid at maturity and the OID includible in the owner's gross income for the calendar year when the obligation matures. H&r block file online The required withholding at maturity is limited to the cash paid. H&r block file online Sales and redemptions. H&r block file online   If you report the gross proceeds from a sale, exchange, or redemption of a debt instrument on Form 1099-B for a calendar year, you may be required to withhold 28% of the amount reported. H&r block file online Backup withholding applies in the following situations. H&r block file online The payee does not give you a TIN. H&r block file online The IRS notifies you that the payee gave an incorrect TIN. H&r block file online For debt instruments held in an account opened after 1983, the payee does not certify, under penalties of perjury, that the TIN given is correct. H&r block file online Payments outside the United States to U. H&r block file online S. H&r block file online person. H&r block file online   The requirements for backup withholding and information reporting apply to payments of OID and interest made outside the United States to a U. H&r block file online S. H&r block file online person, a controlled foreign corporation, or a foreign person at least 50% of whose income for the preceding 3-year period is effectively connected with the conduct of a U. H&r block file online S. H&r block file online trade or business. H&r block file online Payments to foreign person. H&r block file online   The following discussions explain the rules for backup withholding and information reporting on payments to foreign persons. H&r block file online U. H&r block file online S. H&r block file online -source amount. H&r block file online   Backup withholding and information reporting are not required for payments of U. H&r block file online S. H&r block file online -source OID, interest, or proceeds from a sale or redemption of an OID instrument if the payee has given you proof (generally the appropriate Form W-8 or an acceptable substitute) that the payee is a foreign person. H&r block file online A U. H&r block file online S. H&r block file online resident is not a foreign person. H&r block file online For proof of the payee's foreign status, you can rely on the appropriate Form W-8 or on documentary evidence for payments made outside the United States to an offshore account or, in case of broker proceeds, a sale effected outside the United States. H&r block file online Receipt of the appropriate Form W-8 does not relieve you from information reporting and backup withholding if you actually know the payee is a U. H&r block file online S. H&r block file online person. H&r block file online   For information about the 28% withholding tax that may apply to payments of U. H&r block file online S. H&r block file online -source OID or interest to foreign persons, see Publication 515. H&r block file online Foreign-source amount. H&r block file online   Backup withholding and information reporting are not required for payments of foreign-source OID and interest made outside the United States. H&r block file online However, if the payments are made inside the United States, the requirements for backup withholding and information reporting will apply unless the payee has given you the appropriate Form W-8 or acceptable substitute as proof that the payee is a foreign person. H&r block file online More information. H&r block file online   For more information about backup withholding and information reporting on foreign-source amounts or payments to foreign persons, see Regulations section 1. H&r block file online 6049-5. H&r block file online Information for Owners of OID Debt Instruments This section is for persons who prepare their own tax returns. H&r block file online It discusses the income tax rules for figuring and reporting OID on long-term debt instruments. H&r block file online It also includes a similar discussion for stripped bonds and coupons, such as zero coupon bonds available through the Department of the Treasury's STRIPS program and government-sponsored enterprises such as the Resolution Funding Corporation. H&r block file online However, the information provided does not cover every situation. H&r block file online More information can be found in the regulations under sections 1271 through 1275 of the Internal Revenue Code. H&r block file online Including OID in income. H&r block file online   Generally, you include OID in income as it accrues each year, whether or not you receive any payments from the debt instrument issuer. H&r block file online Exceptions. H&r block file online   The rules for including OID in income as it accrues generally do not apply to the following debt instruments. H&r block file online U. H&r block file online S. H&r block file online savings bonds. H&r block file online Tax-exempt obligations. H&r block file online (However, see Tax-Exempt Bonds and Coupons, later. H&r block file online ) Obligations issued by individuals before March 2, 1984. H&r block file online Loans of $10,000 or less between individuals who are not in the business of lending money. H&r block file online (The dollar limit includes outstanding prior loans by the lender to the borrower. H&r block file online ) This exception does not apply if a principal purpose of the loan is to avoid any federal tax. H&r block file online   See chapter 1 of Publication 550 for information about the rules for these and other types of discounted debt instruments, such as short-term and market discount obligations. H&r block file online Publication 550 also discusses rules for holders of REMIC interests and CDOs. H&r block file online De minimis rule. H&r block file online   You can treat OID as zero if the total OID on a debt instrument is less than one-fourth of 1% (. H&r block file online 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. H&r block file online Debt instruments with de minimis OID are not listed in this publication. H&r block file online There are special rules to determine the de minimis amount in the case of debt instruments that provide for more than one payment of principal. H&r block file online Also, the de minimis rules generally do not apply to tax-exempt obligations. H&r block file online Example 2. H&r block file online You bought at issuance a 10-year debt instrument with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. H&r block file online One-fourth of 1% of $1,000 (the stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. H&r block file online Under the de minimis rule, you can treat the OID as zero because the $20 discount is less than $25. H&r block file online Example 3. H&r block file online Assume the same facts as Example 2, except the debt instrument was issued at $950. H&r block file online You must report part of the $50 OID each year because it is more than $25. H&r block file online Choice to report all interest as OID. H&r block file online   Generally, you can choose to treat all interest on a debt instrument acquired after April 3, 1994, as OID and include it in gross income by using the constant yield method. H&r block file online See Constant yield method under Debt Instruments Issued After 1984, later, for more information. H&r block file online   For this choice, interest includes stated interest, acquisition discount, OID, de minimis OID, market discount, de minimis market discount, and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. H&r block file online For more information, see Regulations section 1. H&r block file online 1272-3. H&r block file online Purchase after date of original issue. H&r block file online   A debt instrument you purchased after the date of original issue may have premium, acquisition premium, or market discount. H&r block file online If so, the OID reported to you on Form 1099-OID may have to be adjusted. H&r block file online For more information, see Showing an OID adjustment under How To Report OID, later. H&r block file online The following rules generally do not apply to contingent payment debt instruments. H&r block file online Adjustment for premium. H&r block file online   If your debt instrument (other than an inflation-indexed debt instrument) has premium, do not report any OID as ordinary income. H&r block file online Your adjustment is the total OID shown on your Form 1099-OID. H&r block file online Adjustment for acquisition premium. H&r block file online   If your debt instrument has acquisition premium, reduce the OID you report. H&r block file online Your adjustment is the difference between the OID shown on your Form 1099-OID and the reduced OID amount figured using the rules explained later under Figuring OID on Long-Term Debt Instruments. H&r block file online Adjustment for market discount. H&r block file online   If your debt instrument has market discount that you choose to include in income currently, increase the OID you report. H&r block file online Your adjustment is the accrued market discount for the year. H&r block file online See Market Discount Bonds in chapter 1 of Publication 550 for information on how to figure accrued market discount and include it in your income currently and for other information about market discount bonds. H&r block file online If you choose to use the constant yield method to figure accrued market discount, also see Figuring OID on Long-Term Debt Instruments, later. H&r block file online The constant yield method of figuring accrued OID, explained in those discussions under Constant yield method, is also used to figure accrued market discount. H&r block file online For more information concerning premium or market discount on an inflation-indexed debt instrument, see Regulations section 1. H&r block file online 1275-7. H&r block file online Sale, exchange, or redemption. H&r block file online   Generally, you treat your gain or loss from the sale, exchange, or redemption of a discounted debt instrument as a capital gain or loss if you held the debt instrument as a capital asset. H&r block file online If you sold the debt instrument through a broker, you should receive Form 1099-B or an equivalent statement from the broker. H&r block file online Use the Form 1099-B or other statement and your brokerage statements to complete Form 8949, and Schedule D (Form 1040). H&r block file online   Your gain or loss is the difference between the amount you realized on the sale, exchange, or redemption and your basis in the debt instrument. H&r block file online Your basis, generally, is your cost increased by the OID you have included in income each year you held it. H&r block file online In general, to determine your gain or loss on a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. H&r block file online   See chapter 4 of Publication 550 for more information about the tax treatment of the sale or redemption of discounted debt instruments. H&r block file online Example 4. H&r block file online Larry, a calendar year taxpayer, bought a corporate debt instrument at original issue for $86,235. H&r block file online 00 on November 1 of Year 1. H&r block file online The 15-year debt instrument matures on October 31 of Year 16 at a stated redemption price of $100,000. H&r block file online The debt instrument provides for semiannual payments of interest at 10%. H&r block file online Assume the debt instrument is a capital asset in Larry's hands. H&r block file online The debt instrument has $13,765. H&r block file online 00 of OID ($100,000 stated redemption price at maturity minus $86,235. H&r block file online 00 issue price). H&r block file online Larry sold the debt instrument for $90,000 on November 1 of Year 4. H&r block file online Including the OID he will report for the period he held the debt instrument in Year 4, Larry has included $4,556. H&r block file online 00 of OID in income and has increased his basis by that amount to $90,791. H&r block file online 00. H&r block file online Larry has realized a loss of $791. H&r block file online 00. H&r block file online All of Larry's loss is capital loss. H&r block file online Form 1099-OID The issuer of the debt instrument (or your broker, if you purchased or held the debt instrument through a broker) should give you a copy of Form 1099-OID or a similar statement if the accrued OID for the calendar year is $10 or more and the term of the debt instrument is more than 1 year. H&r block file online Form 1099-OID shows all OID income in box 1 except OID on a U. H&r block file online S. H&r block file online Treasury obligation, which is shown in box 8. H&r block file online It also shows, in box 2, any qualified stated interest you must include in income. H&r block file online (However, any qualified stated interest on Treasury inflation-protected securities can be reported on Form 1099-INT in box 3. H&r block file online ) A copy of Form 1099-OID will be sent to the IRS. H&r block file online Do not attach your copy to your tax return. H&r block file online Keep it for your records. H&r block file online If you are required to file a tax return and you receive Form 1099-OID showing taxable amounts, you must report these amounts on your return. H&r block file online A 20% accuracy-related penalty may be charged for underpayment of tax due to either negligence or disregard of rules and regulations or substantial understatement of tax. H&r block file online Form 1099-OID not received. H&r block file online   If you held an OID debt instrument for a calendar year but did not receive a Form 1099-OID, refer to the discussions under Figuring OID on Long-Term Debt Instruments, later, for information on the OID you must report. H&r block file online Refiguring OID. H&r block file online   You must refigure the OID shown on Form 1099-OID, in box 1 or box 8, to determine the proper amount to include in income if one of the following applies. H&r block file online You bought the debt instrument at a premium or at an acquisition premium. H&r block file online The debt instrument is a stripped bond or coupon (including zero coupon bonds backed by U. H&r block file online S. H&r block file online Treasury securities). H&r block file online The debt instrument is a contingent payment or inflation-indexed debt instrument. H&r block file online See the discussions under Figuring OID on Long-Term Debt Instruments or Figuring OID on Stripped Bonds and Coupons, later, for the specific computations. H&r block file online Refiguring interest. H&r block file online   If you disposed of a debt instrument or acquired it from another holder between interest dates, see the discussion under Bonds Sold Between Interest Dates in chapter 1 of Publication 550 for information about refiguring the interest shown on Form 1099-OID in box 2. H&r block file online Nominee. H&r block file online   If you are the holder of an OID debt instrument and you receive a Form 1099-OID that shows your taxpayer identification number and includes amounts belonging to another person, you are considered a “nominee. H&r block file online ” You must file another Form 1099-OID for each actual owner, showing the OID for the owner. H&r block file online Show the owner of the debt instrument as the “recipient” and you as the “payer. H&r block file online ”   Complete Form 1099-OID and Form 1096 and file the forms with the Internal Revenue Service Center for your area. H&r block file online You must also give a copy of the Form 1099-OID to the actual owner. H&r block file online However, you are not required to file a nominee return to show amounts belonging to your spouse. H&r block file online See the Form 1099 instructions for more information. H&r block file online   When preparing your tax return, follow the instructions under Showing an OID adjustment in the next discussion. H&r block file online How To Report OID Generally, you report your taxable interest and OID income on the interest line of Form 1040EZ, Form 1040A, or Form 1040. H&r block file online Form 1040 or Form 1040A required. H&r block file online   You must use Form 1040 or Form 1040A (you cannot use Form 1040EZ) under either of the following conditions. H&r block file online You received a Form 1099-OID as a nominee for the actual owner. H&r block file online Your total interest and OID income for the year was more than $1,500. H&r block file online Form 1040 required. H&r block file online   You must use Form 1040 (you cannot use Form 1040A or Form 1040EZ) if you are reporting more or less OID than the amount shown on Form 1099-OID, other than because you are a nominee. H&r block file online For example, if you paid a premium or an acquisition premium when you purchased the debt instrument, you must use Form 1040 because you will report less OID than shown on Form 1099-OID. H&r block file online Also, you must use Form 1040 if you were charged an early withdrawal penalty. H&r block file online Where to report. H&r block file online   List each payer's name (if a brokerage firm gave you a Form 1099, list the brokerage firm as the payer) and the amount received from each payer on Form 1040A, Schedule B, Part I, line 1, or Form 1040, Schedule B, line 1. H&r block file online Include all OID and periodic interest shown on any Form 1099-OID, boxes 1, 2, and 8, you received for the tax year. H&r block file online Also include any other OID and interest income for which you did not receive a Form 1099. H&r block file online Showing an OID adjustment. H&r block file online   If you use Form 1040 to report more or less OID than shown on Form 1099-OID, list the full OID on Schedule B, Part I, line 1, and follow the instructions under 1 or 2, next. H&r block file online   If you use Form 1040A to report the OID shown on a Form 1099-OID you received as a nominee for the actual owner, list the full OID on Schedule B, Part I, line 1 and follow the instructions under 1. H&r block file online If the OID, as adjusted, is less than the amount shown on Form 1099-OID, show the adjustment as follows. H&r block file online Under your last entry on line 1, subtotal all interest and OID income listed on line 1. H&r block file online Below the subtotal, write “Nominee Distribution” or “OID Adjustment” and show the OID you are not required to report. H&r block file online Subtract that OID from the subtotal and enter the result on line 2. H&r block file online If the OID, as adjusted, is more than the amount shown on Form 1099-OID, show the adjustment as follows. H&r block file online Under your last entry on line 1, subtotal all interest and OID income listed on line 1. H&r block file online Below the subtotal, write “OID Adjustment” and show the additional OID. H&r block file online Add that OID to the subtotal and enter the result on line 2. H&r block file online Figuring OID on Long-Term Debt Instruments How you figure the OID on a long-term debt instrument depends on the date it was issued. H&r block file online It also may depend on the type of the debt instrument. H&r block file online There are different rules for each of the following debt instruments. H&r block file online Corporate debt instruments issued after 1954 and before May 28, 1969, and government debt instruments issued after 1954 and before July 2, 1982. H&r block file online Corporate debt instruments issued after May 27, 1969, and before July 2, 1982. H&r block file online Debt instruments issued after July 1, 1982, and before 1985. H&r block file online Debt instruments issued after 1984 (other than debt instruments described in (5) and (6)). H&r block file online Contingent payment debt instruments issued after August 12, 1996. H&r block file online Inflation-indexed debt instruments (including Treasury inflation-protected securities) issued after January 5, 1997. H&r block file online Zero coupon bonds. H&r block file online   The rules for figuring OID on zero coupon bonds backed by U. H&r block file online S. H&r block file online Treasury securities are discussed under Figuring OID on Stripped Bonds and Coupons, later. H&r block file online Corporate Debt Instruments Issued After 1954 and Before May 28, 1969, and Government Debt Instruments Issued After 1954 and Before July 2, 1982 If you hold these debt instruments as capital assets, you include OID in income only in the year the debt instrument is sold, exchanged, or redeemed, and only if you have a gain. H&r block file online The OID, which is taxed as ordinary income, generally equals the following amount. H&r block file online   number of full months you held the debt instrument  number of full months from date of original issue to date of maturity X original issue discount The balance of the gain is capital gain. H&r block file online If there is a loss on the sale of the debt instrument, the entire loss is a capital loss and no OID is reported. H&r block file online Corporate Debt Instruments Issued After May 27, 1969, and Before July 2, 1982 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments. H&r block file online For information about showing the correct OID on your tax return, see the discussion under How To Report OID, earlier. H&r block file online Your basis in the debt instrument is increased by the OID you include in income. H&r block file online Form 1099-OID. H&r block file online   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. H&r block file online However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. H&r block file online See Reduction for acquisition premium, later. H&r block file online If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. H&r block file online irs. H&r block file online gov/pub1212 by clicking the link under Recent Developments. H&r block file online Form 1099-OID not received. H&r block file online    The OID listed is for each $1,000 of redemption price. H&r block file online You must adjust the listed amount if your debt instrument has a different principal amount. H&r block file online For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. H&r block file online   If you held the debt instrument the entire year, use the OID shown in Section I-A for a calendar year. H&r block file online (If your debt instrument is not listed in Section I-A, consult the issuer for information about the issue price and the OID that accrued for that year. H&r block file online ) If you did not hold the debt instrument the entire year, figure your OID using the following method. H&r block file online Divide the OID shown by 12. H&r block file online Multiply the result in (1) by the number of complete and partial months (for example, 6½ months) you held the debt instrument during a calendar year. H&r block file online This is the OID to include in income unless you paid an acquisition premium. H&r block file online The reduction for acquisition premium is discussed next. H&r block file online Reduction for acquisition premium. H&r block file online   If you bought the debt instrument at an acquisition premium, figure the OID to include in income as follows. H&r block file online Divide the total OID on the debt instrument by the number of complete months, and any part of a month, from the date of original issue to the maturity date. H&r block file online This is the monthly OID. H&r block file online Subtract from your cost the issue price and the accumulated OID from the date of issue to the date of purchase. H&r block file online (If the result is zero or less, stop here. H&r block file online You did not pay an acquisition premium. H&r block file online ) Divide the amount figured in (2) by the number of complete months, and any part of a month, from the date of your purchase to the maturity date. H&r block file online Subtract the amount figured in (3) from the amount figured in (1). H&r block file online This is the OID to include in income for each month you hold the debt instrument during the year. H&r block file online Transfers during the month. H&r block file online   If you buy or sell a debt instrument on any day other than the same day of the month as the date of original issue, the ratable monthly portion of OID for the month of sale is divided between the seller and the buyer according to the number of days each held the debt instrument. H&r block file online Your holding period for this purpose begins the day you acquire the debt instrument and ends the day before you dispose of it. H&r block file online Debt Instruments Issued After July 1, 1982, and Before 1985 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments and increase your basis by the amount included. H&r block file online For information about showing the correct OID on your tax return, see How To Report OID, earlier. H&r block file online Form 1099-OID. H&r block file online   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. H&r block file online However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. H&r block file online See Constant yield method and the discussions on acquisition premium that follow, later. H&r block file online If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. H&r block file online irs. H&r block file online gov/pub1212 by clicking the link under Recent Developments. H&r block file online Form 1099-OID not received. H&r block file online    The OID listed is for each $1,000 of redemption price. H&r block file online You must adjust the listed amount if your debt instrument has a different principal amount. H&r block file online For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. H&r block file online   If you held the debt instrument the entire year, use the OID shown in Section I-A. H&r block file online (If your instrument is not listed in Section I-A, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. H&r block file online ) If you did not hold the debt instrument the entire year, figure your OID using either of the following methods. H&r block file online Method 1. H&r block file online    Divide the total OID for a calendar year by 365 (366 for leap years). H&r block file online Multiply the result in (1) by the number of days you held the debt instrument during that particular year. H&r block file online  This computation is an approximation and may result in a slightly higher OID than Method 2. H&r block file online Method 2. H&r block file online    Look up the daily OID for the first accrual period you held the debt instrument during a calendar year. H&r block file online (See Accrual period under Constant yield method, next. H&r block file online ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. H&r block file online If you held the debt instrument for part of both accrual periods, repeat (1) and (2) for the second accrual period. H&r block file online Add the results of (2) and (3). H&r block file online This is the OID to include in income, unless you paid an acquisition premium. H&r block file online (The reduction for acquisition premium is discussed later. H&r block file online ) Constant yield method. H&r block file online   This discussion shows how to figure OID on debt instruments issued after July 1, 1982, and before 1985, using a constant yield method. H&r block file online OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. H&r block file online   Figure the OID allocable to any accrual period as follows. H&r block file online Multiply the adjusted issue price at the beginning of the accrual period by the debt instrument's yield to maturity. H&r block file online Subtract from the result in (1) any qualified stated interest allocable to the accrual period. H&r block file online Accrual period. H&r block file online   An accrual period for any OID debt instrument issued after July 1, 1982, and before 1985 is each 1-year period beginning on the date of the issue of the obligation and each anniversary thereafter, or the shorter period to maturity for the last accrual period. H&r block file online Your tax year will usually include parts of two accrual periods. H&r block file online Daily OID. H&r block file online   The OID for any accrual period is allocated equally to each day in the accrual period. H&r block file online You must include in income the sum of the OID amounts for each day you hold the debt instrument during the year. H&r block file online If your tax year includes parts of two or more accrual periods, you must include the proper daily OID amounts for each accrual period. H&r block file online Figuring daily OID. H&r block file online   The daily OID for the initial accrual period is figured using the following formula. H&r block file online   (ip × ytm) − qsi     p   ip = issue price ytm = yield to maturity qsi = qualified stated interest p = number of days in accrual period         The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. H&r block file online Reduction for acquisition premium on debt instruments purchased before July 19, 1984. H&r block file online   If you bought the debt instrument at an acquisition premium before July 19, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. H&r block file online Figure the daily acquisition premium by dividing the total acquisition premium by the number of days in the period beginning on your purchase date and ending on the day before the date of maturity. H&r block file online Reduction for acquisition premium on debt instruments purchased after July 18, 1984. H&r block file online   If you bought the debt instrument at an acquisition premium after July 18, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. H&r block file online However, the method of figuring the daily acquisition premium is different from the method described in the preceding discussion. H&r block file online To figure the daily acquisition premium under this method, multiply the daily OID by the following fraction. H&r block file online The numerator is the acquisition premium. H&r block file online The denominator is the total OID remaining for the debt instrument after your purchase date. H&r block file online Section I-A is available at www. H&r block file online irs. H&r block file online gov/pub1212 and clicking the link under Recent Developments. H&r block file online Using Section I-A to figure accumulated OID. H&r block file online   If you bought your corporate debt instrument in a calendar year or the subsequent year, you can figure the accumulated OID to the date of purchase by adding the following amounts. H&r block file online The amount from the “Total OID to January 1, YYYY” column for your debt instrument. H&r block file online The OID from January 1 of a calendar year to the date of purchase, figured as follows. H&r block file online Multiply the daily OID for the first accrual period in the calendar year by the number of days from January 1 to the date of purchase, or the end of the accrual period if the debt instrument was purchased in the second or third accrual period. H&r block file online Multiply the daily OID for each subsequent accrual period by the number of days in the period to the date of purchase or the end of the accrual period, whichever applies. H&r block file online Add the amounts figured in (2a) and (2b). H&r block file online Debt Instruments Issued After 1984 If you hold debt instruments issued after 1984, you must report part of the OID in gross income each year that you own the debt instruments. H&r block file online You must include the OID in gross income whether or not you hold the debt instrument as a capital asset. H&r block file online Your basis in the debt instrument is increased by the OID you include in income. H&r block file online For information about showing the correct OID on your tax return, see How To Report OID, earlier. H&r block file online Form 1099-OID. H&r block file online   You should receive a Form 1099-OID showing OID for the part of a calendar year you held the debt instrument. H&r block file online However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. H&r block file online See Constant yield method and Reduction for acquisition premium, later. H&r block file online   You may also need to refigure the OID for a contingent payment or inflation-indexed debt instrument on which the amount reported on Form 1099-OID is inaccurate. H&r block file online See Contingent Payment Debt Instruments or Inflation-Indexed Debt Instruments, later. H&r block file online If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-B available at www. H&r block file online irs. H&r block file online gov/pub1212 by clicking the link under Recent Developments. H&r block file online Form 1099-OID not received. H&r block file online   The OID listed is for each $1,000 of redemption price. H&r block file online You must adjust the listed amount if your debt instrument has a different principal amount. H&r block file online For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. H&r block file online   Use the OID shown in Section I-B for a calendar year if you held the debt instrument the entire year. H&r block file online (If your debt instrument is not listed in Section I-B, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. H&r block file online ) If you did not hold the debt instrument the entire year, figure your OID as follows. H&r block file online Look up the daily OID for the first accrual period in which you held the debt instrument during a calendar year. H&r block file online (See Accrual period under Constant yield method, later. H&r block file online ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. H&r block file online Repeat (1) and (2) for any remaining accrual periods in which you held the debt instrument. H&r block file online Add the results of (2) and (3). H&r block file online This is the OID to include in income for that year, unless you paid an acquisition premium. H&r block file online (The reduction for acquisition premium is discussed later. H&r block file online ) Tax-exempt bond. H&r block file online   If you own a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. H&r block file online You need to make this adjustment to determine if you have a gain or loss on a later disposition of the bond. H&r block file online In general, use the rules that follow to determine your OID. H&r block file online Constant yield method. H&r block file online   This discussion shows how to figure OID on debt instruments issued after 1984 using a constant yield method. H&r block file online (The special rules that apply to contingent payment debt instruments and inflation-indexed debt instruments are explained later. H&r block file online ) OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. H&r block file online   Figure the OID allocable to any accrual period as follows. H&r block file online Multiply the adjusted issue price at the beginning of the accrual period by a fraction. H&r block file online The numerator of the fraction is the debt instrument's yield to maturity and the denominator is the number of accrual periods per year. H&r block file online The yield must be stated appropriately taking into account the length of the particular accrual period. H&r block file online Subtract from the result in (1) any qualified stated interest allocable to the accrual period. H&r block file online Accrual period. H&r block file online   For debt instruments issued after 1984 and before April 4, 1994, an accrual period is each 6-month period that ends on the day that corresponds to the stated maturity date of the debt instrument or the date 6 months before that date. H&r block file online For example, a debt instrument maturing on March 31 has accrual periods that end on September 30 and March 31 of each calendar year. H&r block file online Any short period is included as the first accrual period. H&r block file online   For debt instruments issued after April 3, 1994, accrual periods may be of any length and may vary in length over the term of the debt instrument, as long as each accrual period is no longer than 1 year and all payments are made on the first or last day of an accrual period. H&r block file online However, the OID listed for these debt instruments in Section I-B has been figured using 6-month accrual periods. H&r block file online Daily OID. H&r block file online   The OID for any accrual period is allocated equally to each day in the accrual period. H&r block file online Figure the amount to include in income by adding the OID for each day you hold the debt instrument during the year. H&r block file online Since your tax year will usually include parts of two or more accrual periods, you must include the proper daily OID for each accrual period. H&r block file online If your debt instrument has 6-month accrual periods, your tax year will usually include one full 6-month accrual period and parts of two other 6-month periods. H&r block file online Figuring daily OID. H&r block file online   The daily OID for the initial accrual period is figured using the following formula. H&r block file online   (ip × ytm/n) − qsi     p   ip = issue price ytm = yield to maturity n = number of accrual periods in 1 year qsi = qualified stated interest p = number of days in accrual period       The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. H&r block file online Example 5. H&r block file online On January 1 of Year 1, you bought a 15-year, 10% debt instrument of A Corporation at original issue for $86,235. H&r block file online 17. H&r block file online According to the prospectus, the debt instrument matures on December 31 of Year 15 at a stated redemption price of $100,000. H&r block file online The yield to maturity is 12%, compounded semiannually. H&r block file online The debt instrument provides for qualified stated interest payments of $5,000 on June 30 and December 31 of each calendar year. H&r block file online The accrual periods are the 6-month periods ending on each of these dates. H&r block file online The number of days for the first accrual period (January 1 through June 30) is 181 days (182 for leap years). H&r block file online The daily OID for the first accrual period is figured as follows. H&r block file online   ($86,235. H&r block file online 17 x . H&r block file online 12/2) – $5,000     181 days     = $174. H&r block file online 11020 = $. H&r block file online 96193   181           The adjusted issue price at the beginning of the second accrual period is the issue price plus the OID previously includible in income ($86,235. H&r block file online 17 + $174. H&r block file online 11), or $86,409. H&r block file online 28. H&r block file online The number of days for the second accrual period (July 1 through December 31) is 184 days. H&r block file online The daily OID for the second accrual period is figured as follows. H&r block file online   ($86,409. H&r block file online 28 x . H&r block file online 12/2) – $5,000     184 days     = $184. H&r block file online 55681 = $1. H&r block file online 00303   184 Since the first and second accrual periods coincide exactly with your tax year, you include in income for Year 1 the OID allocable to the first two accrual periods, $174. H&r block file online 11 ($. H&r block file online 95665 × 182 days) plus $184. H&r block file online 56 ($1. H&r block file online 00303 × 184 days), or $358. H&r block file online 67. H&r block file online Add the OID to the $10,000 interest you report on your income tax return for Year 1. H&r block file online Example 6. H&r block file online Assume the same facts as in Example 5, except that you bought the debt instrument at original issue on May 1 of Year 1, with a maturity date of April 30, Year 16. H&r block file online Also, the interest payment dates are October 31 and April 30 of each calendar year. H&r block file online The accrual periods are the 6-month periods ending on each of these dates. H&r block file online The number of days for the first accrual period (May 1 through October 31) is 184 days. H&r block file online The daily OID for the first accrual period is figured as follows. H&r block file online   ($86,235. H&r block file online 17 x . H&r block file online 12/2) – $5,000     184 days     = $174. H&r block file online 11020 = $. H&r block file online 94625   184           The number of days for the second accrual period (November 1 through April 30) is 181 days (182 for leap years). H&r block file online The daily OID for the second accrual period is figured as follows. H&r block file online   ($86,409. H&r block file online 28 x . H&r block file online 12/2) – $5,000     181 days     = $184. H&r block file online 55681 = $1. H&r block file online 01965   181 If you hold the debt instrument through the end of Year 1, you must include $236. H&r block file online 31 of OID in income. H&r block file online This is $174. H&r block file online 11 ($. H&r block file online 94625 × 184 days) for the period May 1 through October 31 plus $62. H&r block file online 20 ($1. H&r block file online 01965 × 61 days) for the period November 1 through December 31. H&r block file online The OID is added to the $5,000 interest income paid on October 31 of Year 1. H&r block file online Your basis in the debt instrument is increased by the OID you include in income. H&r block file online On January 1 of Year 2, your basis in the A Corporation debt instrument is $86,471. H&r block file online 48 ($86,235. H&r block file online 17 + $236. H&r block file online 31). H&r block file online Short first accrual period. H&r block file online   You may have to make adjustments if a debt instrument has a short first accrual period. H&r block file online For example, a debt instrument with 6-month accrual periods that is issued on February 15 and matures on October 31 has a short first accrual period that ends April 30. H&r block file online (The remaining accrual periods begin on May 1 and November 1. H&r block file online ) For this short period, figure the daily OID as described earlier, but adjust the yield for the length of the short accrual period. H&r block file online You may use any reasonable compounding method in determining OID for a short period. H&r block file online Examples of reasonable compounding methods include continuous compounding and monthly compounding (that is, simple interest within a month). H&r block file online Consult your tax advisor for more information about making this computation. H&r block file online   The OID for the final accrual period is the difference between the amount payable at maturity (other than a payment of qualified stated interest) and the adjusted issue price at the beginning of the final accrual period. H&r block file online Reduction for acquisition premium. H&r block file online   If you bought the debt instrument at an acquisition premium, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. H&r block file online To figure the daily acquisition premium, multiply the daily OID by the following fraction. H&r block file online The numerator is the acquisition premium. H&r block file online The denominator is the total OID remaining for the debt instrument after your purchase date. H&r block file online Example 7. H&r block file online Assume the same facts as in Example 6, except that you bought the debt instrument on November 1 of Year 1 for $87,000, after its original issue on May 1 of Year 1. H&r block file online The adjusted issue price on November 1 of Year 1 is $86,409. H&r block file online 28 ($86,235. H&r block file online 17 + $174. H&r block file online 11). H&r block file online In this case, you paid an acquisition premium of $590. H&r block file online 72 ($87,000 − $86,409. H&r block file online 28). H&r block file online The daily OID for the accrual period November 1 through April 30, reduced for the acquisition premium, is figured as follows. H&r block file online 1) Daily OID on date of purchase (2nd accrual period) $1. H&r block file online 01965*  2)  Acquisition premium $590. H&r block file online 72    3)  Total OID remaining after purchase date ($13,764. H&r block file online 83 − $174. H&r block file online 11) 13,590. H&r block file online 72   4) Line 2 ÷ line 3 . H&r block file online 04346  5)  Line 1 × line 4 . H&r block file online 04432  6)  Daily OID reduced for the acquisition premium. H&r block file online Line 1 − line 5 $0. H&r block file online 97533  * As shown in Example 6. H&r block file online The total OID to include in income for Year 1 is $59. H&r block file online 50 ($. H&r block file online 97533 × 61 days). H&r block file online Contingent Payment Debt Instruments This discussion shows how to figure OID on a contingent payment debt instrument issued after August 12, 1996, that was issued for cash or publicly traded property. H&r block file online In general, a contingent payment debt instrument provides for one or more payments that are contingent as to timing or amount. H&r block file online If you hold a contingent payment bond, you must report OID as it accrues each year. H&r block file online Because the actual payments on a contingent payment debt instrument cannot be known in advance, issuers and holders cannot use the constant yield method (discussed earlier under Debt Instruments Issued After 1984) without making certain assumptions about the payments on the debt instrument. H&r block file online To figure OID accruals on contingent payment debt instruments, holders and issuers must use the noncontingent bond method. H&r block file online Noncontingent bond method. H&r block file online    Under this method, the issuer must compute a comparable yield for the debt instrument and, based on this yield, construct a projected payment schedule for the instrument, which includes a projected fixed amount for each contingent payment. H&r block file online In general, holders and issuers accrue OID on this projected payment schedule using the constant yield method that applies to fixed payment debt instruments. H&r block file online When a contingent payment differs from the projected fixed amount, the holders and issuers make adjustments to their OID accruals. H&r block file online If the actual contingent payment is larger than expected, both the issuer and the holder increase their OID accruals. H&r block file online If the actual contingent payment is smaller than expected, holders and issuers generally decrease their OID accruals. H&r block file online Form 1099-OID. H&r block file online   The amount shown on Form 1099-OID in box 1 you receive for a contingent payment debt instrument may not be the correct amount to include in income. H&r block file online For example, the amount may not be correct if the contingent payment was different from the projected amount. H&r block file online If the amount in box 1 is not correct, you must figure the OID to report on your return under the following rules. H&r block file online For information on showing an OID adjustment on your tax return, see How To Report OID, earlier. H&r block file online Figuring OID. H&r block file online   To figure OID on a contingent payment debt instrument, you need to know the “comparable yield” and “projected payment schedule” of the debt instrument. H&r block file online The issuer must make these available to you. H&r block file online Comparable yield. H&r block file online   The comparable yield generally is the yield at which the issuer would issue a fixed rate debt instrument with terms and conditions similar to those of the contingent payment debt instrument. H&r block file online The comparable yield is determined as of the debt instrument's issue date. H&r block file online Projected payment schedule. H&r block file online   The projected payment schedule for a contingent payment debt instrument includes all fixed payments due under the instrument and a projected fixed amount for each contingent payment. H&r block file online The projected payment schedule is created by the issuer as of the debt instrument's issue date. H&r block file online It is used to determine the issuer's and holder's interest accruals and adjustments. H&r block file online Steps for figuring OID. H&r block file online   Figure the OID on a contingent payment debt instrument in two steps. H&r block file online Figure the OID using the constant yield method (discussed earlier under Debt Instruments Issued After 1984 ) that applies to fixed payment debt instruments. H&r block file online Use the comparable yield as the yield to maturity. H&r block file online In general, use the projected payment schedule to determine the instrument's adjusted issue price at the beginning of each accrual period (other than the initial period). H&r block file online Do not treat any amount payable as qualified stated interest. H&r block file online Adjust the OID in (1) to account for actual contingent payments. H&r block file online If the contingent payment is greater than the projected fixed amount, you have a positive adjustment. H&r block file online If the contingent payment is less than the projected fixed amount, you have a negative adjustment. H&r block file online Net positive adjustment. H&r block file online   A net positive adjustment exists for a tax year when the total of any positive adjustments described in (2) above for the tax year is more than the total of any negative adjustments for the tax year. H&r block file online Treat a net positive adjustment as additional OID for the tax year. H&r block file online Net negative adjustment. H&r block file online   A net negative adjustment exists for a tax year when the total of any negative adjustments described in (2) above for the tax year is more than the total of any positive adjustments for the tax year. H&r block file online Use a net negative adjustment to offset OID on the debt instrument for the tax year. H&r block file online If the net negative adjustment is more than the OID on the debt instrument for the tax year, you can claim the difference as an ordinary loss. H&r block file online However, the amount you can claim as an ordinary loss is limited to the OID on the debt instrument you included in income in prior tax years. H&r block file online You must carry forward any net negative adjustment that is more than the total OID for the tax year and prior tax years and treat it as a negative adjustment in the next tax year. H&r block file online Basis adjustments. H&r block file online   In general, increase your basis in a contingent payment debt instrument by the OID included in income. H&r block file online Your basis, however, is not affected by any negative or positive adjustments. H&r block file online Decrease your basis by any noncontingent payment received and the projected contingent payment scheduled to be received. H&r block file online Treatment of gain or loss on sale or exchange. H&r block file online   If you sell a contingent payment debt instrument at a gain, your gain is ordinary income (interest income), even if you hold the debt instrument as a capital asset. H&r block file online If you sell a contingent payment debt instrument at a loss, your loss is an ordinary loss to the extent of your prior OID accruals on the debt instrument. H&r block file online If the debt instrument is a capital asset, treat any loss that is more than your prior OID accruals as a capital loss. H&r block file online See Regulations section 1. H&r block file online 1275-4 for exceptions to these rules. H&r block file online Premium, acquisition premium, and market discount. H&r block file online   The rules for accruing premium, acquisition premium, and market discount do not apply to a contingent payment debt instrument. H&r block file online See Regulations section 1. H&r block file online 1275-4 to determine how to account for these items. H&r block file online Inflation-Indexed Debt Instruments This discussion shows how you figure OID on certain inflation-indexed debt instruments issued after January 5, 1997. H&r block file online An inflation-indexed debt instrument is generally a debt instrument on which the payments are adjusted for inflation and d