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Turbotax 1040ez Online

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Turbotax 1040ez online Publication 598 - Introductory Material Table of Contents What's New Introduction Useful Items - You may want to see: What's New Federal tax deposits must be made by electronic funds transfer. Turbotax 1040ez online Beginning January 1, 2011, you must use electronic funds transfer to make all federal tax deposits. Turbotax 1040ez online Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after 2010. Turbotax 1040ez online See Federal Tax Deposits Must be Made by Electronic Funds Transfer on page 3. Turbotax 1040ez online For large corporations, special rules apply for estimated tax payments that are required to be made for the period that includes July, August, or September of 2012, and the period that immediately follows these months. Turbotax 1040ez online See the instructions for line 12 on the 2012 Form 990-W (Worksheet), Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations. Turbotax 1040ez online The maximum cost of a low-cost article, for organizations eligible to receive charitable contributions, was increased to $9. Turbotax 1040ez online 70 for 2011. Turbotax 1040ez online See Distribution of low-cost articles on page 8. Turbotax 1040ez online The annual limit on associate member dues received by an agricultural or horticultural organization not treated as gross income was increased to $148 for 2011. Turbotax 1040ez online See Exception under Dues of Agricultural Organizations and Business Leagues on page 10. Turbotax 1040ez online The IRS has created a page on IRS. Turbotax 1040ez online gov that includes information about Pub. Turbotax 1040ez online 598 at www. Turbotax 1040ez online irs. Turbotax 1040ez online gov/pub598. Turbotax 1040ez online Introduction An exempt organization is not taxed on its income from an activity substantially related to the charitable, educational, or other purpose that is the basis for the organization's exemption. Turbotax 1040ez online Such income is exempt even if the activity is a trade or business. Turbotax 1040ez online However, if an exempt organization regularly carries on a trade or business not substantially related to its exempt purpose, except that it provides funds to carry out that purpose, the organization is subject to tax on its income from that unrelated trade or business. Turbotax 1040ez online This publication covers the rules for the tax on unrelated business income of exempt organizations. Turbotax 1040ez online It explains: Which organizations are subject to the tax (chapter 1), What the requirements are for filing a tax return (chapter 2), What an unrelated trade or business is (chapter 3), and How to figure unrelated business taxable income (chapter 4). Turbotax 1040ez online All section references in this publication are to the Internal Revenue Code. Turbotax 1040ez online Useful Items - You may want to see: Publication 557 Tax-Exempt Status for Your Organization Form (and Instructions) 990-T Exempt Organization Business Income Tax Return See chapter 5 for information about getting these publications and forms. Turbotax 1040ez online Comments and suggestions. Turbotax 1040ez online   We welcome your comments about this publication and your suggestions for future editions. Turbotax 1040ez online   You can write to us at: Internal Revenue Service Individual Forms and Publications Branch SE:W:CAR:MP:T:I 1111 Constitution Ave. Turbotax 1040ez online NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Turbotax 1040ez online Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Turbotax 1040ez online   You can email us at taxforms@irs. Turbotax 1040ez online gov. Turbotax 1040ez online Please put “publications Comment” on the subject line. Turbotax 1040ez online You can also send us comments from www. Turbotax 1040ez online irs. Turbotax 1040ez online gov/formspubs/, select “Comment on Tax Forms and Publications” under “Information about. Turbotax 1040ez online ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Turbotax 1040ez online Prev  Up  Next   Home   More Online Publications
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Employment-Related Identity Theft

If you have experienced one of the following, this may be an indication your Social Security number or other personal information may have been used by another person without your permission for employment purposes.    

  1. You received a letter 4491C from the Internal Revenue Service stating that you were the victim of employment related identity theft or
  2. You received a notice from the Internal Revenue Service stating that you received wages that you did not earn or
  3. You receive a Form W-2 or 1099 from an employer for whom you did not work or
  4. You receive your annual “Notice of Earnings” statement from the Social Security Administration and the income showing on the statement is more than you have earned or
  5. Your Social Security benefits have been adjusted/denied because of wages that you did not earn

What you should do:

  • Contact the IRS at the number or fax listed on the letter or notice if you received an IRS letter or notice.
  • Contact the Social Security Administration if you received a Form W-2 from an unknown employer, your “Annual Notice of Earnings” from the Social Security Administration shows more wages than you earned or you had your Social Security benefits adjusted/denied. They will review your earnings with you to ensure their records are correct.
  • Review earnings posted to your record on your Social Security Statement. Workers, age 18 and older, may create an account to get their Statement

Additional steps you should take if you suspect that you are the victim of employment related identity theft

  • File a report with your local police department. 
  • Place a fraud alert on your credit reports by contacting any one of the three nationwide credit reporting companies: 

                        Equifax: 800-525-6285  www.equifax.com

                        Experian: 888-397-3742  www.experian.com

                        Trans Union: 800-916-8800  www.transunion.com

                            Federal Trade Commission
                            600 Pennsylvania Avenue NW
                            Washington, DC  20580  

  • Contact any banks or other financial institutions to close any accounts that are unused, have been tampered with or opened without your permission. 
  • If you have information about the identity thief that impacted your personal information negatively, file an online complaint with the Internet Crime Complaint Center (IC3). The IC3 gives victims of cyber-crime a convenient and easy-to-use reporting mechanism that alerts authorities of suspected criminal or civil violations. IC3 sends every complaint to one or more law enforcement or regulatory agencies that have jurisdiction over the matter.

If you are unable to file your tax return because another person has already filed a return under your SSN

  • You are encouraged to contact the IRS at the Identity Theft Specialized Unit (IPSU), toll free at 1-800-908-4490 so we can take steps to further secure your compromised tax account.  Assistors in this unit are specially trained in Identity Theft issues. 
  • Complete Form 14039  or Form 14039SP (Española) to report the identity theft incident, and have an identity theft indicator placed on your account to allow IRS to take protective actions.  

The IPSU hours of Operation:  Monday – Friday 7 a.m. – 7 p.m. your local time (Alaska & Hawaii follow Pacific Time)

For Additional Information

Page Last Reviewed or Updated: 07-Jan-2014

The Turbotax 1040ez Online

Turbotax 1040ez 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. Turbotax 1040ez online Adjustment for premium. Turbotax 1040ez online Adjustment for acquisition premium. Turbotax 1040ez online Adjustment for market discount. Turbotax 1040ez 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. Turbotax 1040ez online “Original issue discount” is defined first. Turbotax 1040ez online The other terms are listed alphabetically. Turbotax 1040ez online Original issue discount (OID). Turbotax 1040ez online   OID is a form of interest. Turbotax 1040ez 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). Turbotax 1040ez online Zero coupon bonds and debt instruments that pay no stated interest until maturity are examples of debt instruments that have OID. Turbotax 1040ez online Accrual period. Turbotax 1040ez online   An accrual period is an interval of time used to measure OID. Turbotax 1040ez 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. Turbotax 1040ez online Acquisition premium. Turbotax 1040ez 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. Turbotax 1040ez online A debt instrument does not have acquisition premium, however, if the debt instrument was purchased at a premium. Turbotax 1040ez online See Premium, later. Turbotax 1040ez online Adjusted issue price. Turbotax 1040ez 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. Turbotax 1040ez online In general, the adjusted issue price at the beginning of the debt instrument's first accrual period is its issue price. Turbotax 1040ez 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. Turbotax 1040ez online Debt instrument. Turbotax 1040ez 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). Turbotax 1040ez online It generally does not include an annuity contract. Turbotax 1040ez online Issue price. Turbotax 1040ez 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. Turbotax 1040ez online Market discount. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online The market discount is the difference between the issue price plus accrued OID and your adjusted basis. Turbotax 1040ez online Premium. Turbotax 1040ez 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. Turbotax 1040ez online The premium is the excess of the adjusted basis over the payable amounts. Turbotax 1040ez online See Publication 550 for information on the tax treatment of bond premium. Turbotax 1040ez online Qualified stated interest. Turbotax 1040ez 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. Turbotax 1040ez online Stated redemption price at maturity. Turbotax 1040ez 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. Turbotax 1040ez online Yield to maturity (YTM). Turbotax 1040ez 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. Turbotax 1040ez online The YTM is generally shown on the face of the debt instrument or in the literature you receive from your broker. Turbotax 1040ez online If you do not have this information, consult your broker, tax advisor, or the issuer. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online The OID amounts listed are figured without reference to the price or date at which you acquired the debt instrument. Turbotax 1040ez 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. Turbotax 1040ez online The following discussions explain what information is contained in each section of the list. Turbotax 1040ez online Section I. Turbotax 1040ez online   This section contains publicly offered, long-term debt instruments. Turbotax 1040ez online Section I-A: Corporate Debt Instruments Issued Before 1985. Turbotax 1040ez online Section I-B: Corporate Debt Instruments Issued After 1984. Turbotax 1040ez online Section I-C: Inflation-Indexed Debt Instruments. Turbotax 1040ez online For each publicly offered debt instrument in Section I, the list contains the following information. Turbotax 1040ez online The name of the issuer. Turbotax 1040ez online The Committee on Uniform Security Identification Procedures (CUSIP) number. Turbotax 1040ez online The issue date. Turbotax 1040ez online The maturity date. Turbotax 1040ez online The issue price expressed as a percent of principal or of stated redemption price at maturity. Turbotax 1040ez online The annual stated or coupon interest rate. Turbotax 1040ez online (This rate is shown as 0. Turbotax 1040ez online 00 if no annual interest payments are provided. Turbotax 1040ez online ) The yield to maturity will be added to Section I-B for bonds issued after December 31, 2006. Turbotax 1040ez online The total OID accrued up to January 1 of a calendar year. Turbotax 1040ez online (This information is not available for every instrument. Turbotax 1040ez 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. Turbotax 1040ez online The total OID per $1,000 of principal or maturity value for a calendar year and a subsequent year. Turbotax 1040ez online Section II. Turbotax 1040ez online   This section contains stripped coupons and principal components of U. Turbotax 1040ez online S. Turbotax 1040ez online Treasury and Government-Sponsored Enterprise debt instruments. Turbotax 1040ez 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. Turbotax 1040ez online This section also includes debt instruments backed by U. Turbotax 1040ez online S. Turbotax 1040ez online Treasury securities that represent ownership interests in those securities. Turbotax 1040ez online   The obligations listed in Section II are arranged by maturity date. Turbotax 1040ez online The amounts listed are the total OID for a calendar year per $1,000 of redemption price. Turbotax 1040ez online Section III. Turbotax 1040ez online   This section contains short-term discount obligations. Turbotax 1040ez online Section III-A: Short-Term U. Turbotax 1040ez online S. Turbotax 1040ez online Treasury Bills. Turbotax 1040ez online Section III-B: Federal Home Loan Banks. Turbotax 1040ez online Section III-C: Federal National Mortgage Association. Turbotax 1040ez online Section III-D: Federal Farm Credit Banks. Turbotax 1040ez online Section III-E: Federal Home Loan Mortgage Corporation. Turbotax 1040ez online Section III-F: Federal Agricultural Mortgage Corporation. Turbotax 1040ez online    Information that supplements Section III-A is available on the Internet at http://www. Turbotax 1040ez online treasurydirect. Turbotax 1040ez online gov/tdhome. Turbotax 1040ez online htm. Turbotax 1040ez online   The short-term obligations listed in this section are arranged by maturity date. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online Debt Instruments Not on the OID List The list of debt instruments discussed earlier does not contain the following items. Turbotax 1040ez online U. Turbotax 1040ez online S. Turbotax 1040ez online savings bonds. Turbotax 1040ez online Certificates of deposit and other face-amount certificates issued at a discount, including syndicated certificates of deposit. Turbotax 1040ez online Obligations issued by tax-exempt organizations. Turbotax 1040ez online OID debt instruments that matured or were entirely called by the issuer before the tables were posted on the IRS website. Turbotax 1040ez online Mortgage-backed securities and mortgage participation certificates. Turbotax 1040ez online Long-term OID debt instruments issued before May 28, 1969. Turbotax 1040ez online Short-term obligations, other than the obligations listed in Section III. Turbotax 1040ez online Debt instruments issued at a discount by states or their political subdivisions. Turbotax 1040ez online REMIC regular interests and CDOs. Turbotax 1040ez online Commercial paper and banker's acceptances issued at a discount. Turbotax 1040ez online Obligations issued at a discount by individuals. Turbotax 1040ez online Foreign obligations not traded in the United States and obligations not issued in the United States. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online See Backup Withholding, later. Turbotax 1040ez 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. Turbotax 1040ez 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). Turbotax 1040ez online Electronic payee statements. Turbotax 1040ez online   You can issue Form 1099-OID electronically with the consent of the recipient. Turbotax 1040ez online More information. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online Do not report the accrued discount to the date of sale on either Form 1099-INT or Form 1099-OID. Turbotax 1040ez 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. Turbotax 1040ez online A special rule is used to determine the original issue price for information reporting on U. Turbotax 1040ez online S. Turbotax 1040ez online Treasury bills (T-bills) listed in Section III-A. Turbotax 1040ez 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. Turbotax 1040ez online This noncompetitive discount price is the issue price (expressed as a percent of principal) shown in Section III-A. Turbotax 1040ez 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. Turbotax 1040ez online Example 1. Turbotax 1040ez online There are 13-week and 26-week T-bills maturing on the same date as the T-bill being redeemed. Turbotax 1040ez online The price actually paid by the owner cannot be established by owner or middleman records. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online For this purpose, you can rely on Section I of the OID list to determine the following information. Turbotax 1040ez online Whether a debt instrument has OID. Turbotax 1040ez online The OID to be reported on the Form 1099-OID. Turbotax 1040ez online In general, you must report OID on publicly offered, long-term debt instruments listed in Section I. Turbotax 1040ez online You also can report OID on other long-term debt instruments. Turbotax 1040ez online Form 1099-OID. Turbotax 1040ez online   On Form 1099-OID for a calendar year show the following information. Turbotax 1040ez online Box 1. Turbotax 1040ez online The OID for the actual dates the owner held the debt instruments during a calendar year. Turbotax 1040ez online To determine this amount, see Figuring OID, next. Turbotax 1040ez online Box 2. Turbotax 1040ez online The qualified stated interest paid or credited during the calendar year. Turbotax 1040ez online Interest reported here is not reported on Form 1099-INT. Turbotax 1040ez online The qualified stated interest on Treasury inflation-protected securities may be reported on Form 1099-INT in box 3 instead. Turbotax 1040ez online Box 3. Turbotax 1040ez online Any interest or principal forfeited because of an early withdrawal that the owner can deduct from gross income. Turbotax 1040ez online Do not reduce the amounts in boxes 1 and 2 by the forfeiture. Turbotax 1040ez online Box 4. Turbotax 1040ez online Any backup withholding for this debt instrument. Turbotax 1040ez online Box 7. Turbotax 1040ez online The CUSIP number, if any. Turbotax 1040ez 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. Turbotax 1040ez online 50 2006). Turbotax 1040ez online If the issuer of the debt instrument is other than the payer, show the name of the issuer in this box. Turbotax 1040ez online Box 8. Turbotax 1040ez online The OID on a U. Turbotax 1040ez online S. Turbotax 1040ez online Treasury obligation for the part of the year the owner held the debt instrument. Turbotax 1040ez online Box 9. Turbotax 1040ez online Investment expenses passed on to holders of a single-class REMIC. Turbotax 1040ez online Boxes 10-12. Turbotax 1040ez online Use to report any state income tax withheld for this debt instrument. Turbotax 1040ez online Figuring OID. Turbotax 1040ez online   You can determine the OID on a long-term debt instrument by using either of the following. Turbotax 1040ez online Section I of the OID list. Turbotax 1040ez online The income tax regulations. Turbotax 1040ez online Using Section I. Turbotax 1040ez online   If the owner held the debt instrument for the entire calendar year, report the OID shown in Section I for the calendar year. Turbotax 1040ez 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. Turbotax 1040ez online For example, if the debt instrument's stated redemption price at maturity is $500, report one-half the listed OID. Turbotax 1040ez online   If the owner held the debt instrument for less than the entire calendar year, figure the OID to report as follows. Turbotax 1040ez online Look up the daily OID for the first accrual period in the calendar year during which the owner held the debt instrument. Turbotax 1040ez online Multiply the daily OID by the number of days the owner held the debt instrument during that accrual period. Turbotax 1040ez online Repeat steps (1) and (2) for any remaining accrual periods for the year during which the owner held the debt instrument. Turbotax 1040ez online Add the results in steps (2) and (3) to determine the owner's OID per $1,000 of stated redemption price at maturity. Turbotax 1040ez online If necessary, adjust the OID in (4) to reflect the debt instrument's stated redemption price at maturity. Turbotax 1040ez online Report the result on Form 1099-OID in box 1. Turbotax 1040ez online Using the income tax regulations. Turbotax 1040ez online   Instead of using Section I to figure OID, you can use the regulations under sections 1272 through 1275 of the Internal Revenue Code. Turbotax 1040ez 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. Turbotax 1040ez online (If you use Section I-B, the OID is figured using 6-month accrual periods. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online You must file an information return showing the reportable interest and OID, if any, on the CD. Turbotax 1040ez online These rules apply whether or not you sold the CD to the owner. Turbotax 1040ez online Report OID on a CD in the same way as OID on other debt instruments. Turbotax 1040ez online See Short-Term Obligations Redeemed at Maturity and Long-Term Debt Instruments, earlier. Turbotax 1040ez 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. Turbotax 1040ez online However, do not report the interest if either of the following apply. Turbotax 1040ez online You hold the bond as a nominee for the true owner. Turbotax 1040ez online The payee is a foreign person. Turbotax 1040ez online See Payments to foreign person under Backup Withholding, later. Turbotax 1040ez 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. Turbotax 1040ez online The coupon may have been “stripped” (separated) from the bond and separately purchased. Turbotax 1040ez 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. Turbotax 1040ez 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%. Turbotax 1040ez online The backup withholding is deducted at the time a cash payment is made. Turbotax 1040ez online See Pub. Turbotax 1040ez online 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), for more information. Turbotax 1040ez online Backup withholding generally applies in the following situations. Turbotax 1040ez online The payee does not give you a taxpayer identification number (TIN). Turbotax 1040ez online The IRS notifies you that the payee gave an incorrect TIN. Turbotax 1040ez online The IRS notifies you that the payee is subject to backup withholding due to payee underreporting. Turbotax 1040ez 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. Turbotax 1040ez online However, for short-term discount obligations (other than government obligations), bearer bonds and coupons, and U. Turbotax 1040ez online S. Turbotax 1040ez 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. Turbotax 1040ez online Short-term obligations. Turbotax 1040ez online   Backup withholding applies to OID on a short-term obligation only when the OID is paid at maturity. Turbotax 1040ez online However, backup withholding applies to any interest payable before maturity when the interest is paid or credited. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online Long-term obligations. Turbotax 1040ez online   If no cash payments are made on a long-term obligation before maturity, backup withholding applies only at maturity. Turbotax 1040ez 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. Turbotax 1040ez online The amount to be withheld is limited to the cash paid. Turbotax 1040ez online Registered long-term obligations with cash payments. Turbotax 1040ez online   If a registered long-term obligation has cash payments before maturity, backup withholding applies when a cash payment is made. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online For any payment, the required withholding is limited to the cash paid. Turbotax 1040ez online Payee not the original owner. Turbotax 1040ez 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). Turbotax 1040ez online The amount subject to backup withholding at maturity of a listed obligation must be determined using the issue price shown in Section I. Turbotax 1040ez online Bearer long-term obligations with cash payments. Turbotax 1040ez online   If a bearer long-term obligation has cash payments before maturity, backup withholding applies when the cash payments are made. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online The required withholding at maturity is limited to the cash paid. Turbotax 1040ez online Sales and redemptions. Turbotax 1040ez 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. Turbotax 1040ez online Backup withholding applies in the following situations. Turbotax 1040ez online The payee does not give you a TIN. Turbotax 1040ez online The IRS notifies you that the payee gave an incorrect TIN. Turbotax 1040ez 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. Turbotax 1040ez online Payments outside the United States to U. Turbotax 1040ez online S. Turbotax 1040ez online person. Turbotax 1040ez online   The requirements for backup withholding and information reporting apply to payments of OID and interest made outside the United States to a U. Turbotax 1040ez online S. Turbotax 1040ez 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. Turbotax 1040ez online S. Turbotax 1040ez online trade or business. Turbotax 1040ez online Payments to foreign person. Turbotax 1040ez online   The following discussions explain the rules for backup withholding and information reporting on payments to foreign persons. Turbotax 1040ez online U. Turbotax 1040ez online S. Turbotax 1040ez online -source amount. Turbotax 1040ez online   Backup withholding and information reporting are not required for payments of U. Turbotax 1040ez online S. Turbotax 1040ez 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. Turbotax 1040ez online A U. Turbotax 1040ez online S. Turbotax 1040ez online resident is not a foreign person. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online S. Turbotax 1040ez online person. Turbotax 1040ez online   For information about the 28% withholding tax that may apply to payments of U. Turbotax 1040ez online S. Turbotax 1040ez online -source OID or interest to foreign persons, see Publication 515. Turbotax 1040ez online Foreign-source amount. Turbotax 1040ez online   Backup withholding and information reporting are not required for payments of foreign-source OID and interest made outside the United States. Turbotax 1040ez 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. Turbotax 1040ez online More information. Turbotax 1040ez online   For more information about backup withholding and information reporting on foreign-source amounts or payments to foreign persons, see Regulations section 1. Turbotax 1040ez online 6049-5. Turbotax 1040ez online Information for Owners of OID Debt Instruments This section is for persons who prepare their own tax returns. Turbotax 1040ez online It discusses the income tax rules for figuring and reporting OID on long-term debt instruments. Turbotax 1040ez 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. Turbotax 1040ez online However, the information provided does not cover every situation. Turbotax 1040ez online More information can be found in the regulations under sections 1271 through 1275 of the Internal Revenue Code. Turbotax 1040ez online Including OID in income. Turbotax 1040ez online   Generally, you include OID in income as it accrues each year, whether or not you receive any payments from the debt instrument issuer. Turbotax 1040ez online Exceptions. Turbotax 1040ez online   The rules for including OID in income as it accrues generally do not apply to the following debt instruments. Turbotax 1040ez online U. Turbotax 1040ez online S. Turbotax 1040ez online savings bonds. Turbotax 1040ez online Tax-exempt obligations. Turbotax 1040ez online (However, see Tax-Exempt Bonds and Coupons, later. Turbotax 1040ez online ) Obligations issued by individuals before March 2, 1984. Turbotax 1040ez online Loans of $10,000 or less between individuals who are not in the business of lending money. Turbotax 1040ez online (The dollar limit includes outstanding prior loans by the lender to the borrower. Turbotax 1040ez online ) This exception does not apply if a principal purpose of the loan is to avoid any federal tax. Turbotax 1040ez 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. Turbotax 1040ez online Publication 550 also discusses rules for holders of REMIC interests and CDOs. Turbotax 1040ez online De minimis rule. Turbotax 1040ez online   You can treat OID as zero if the total OID on a debt instrument is less than one-fourth of 1% (. Turbotax 1040ez online 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. Turbotax 1040ez online Debt instruments with de minimis OID are not listed in this publication. Turbotax 1040ez 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. Turbotax 1040ez online Also, the de minimis rules generally do not apply to tax-exempt obligations. Turbotax 1040ez online Example 2. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online Under the de minimis rule, you can treat the OID as zero because the $20 discount is less than $25. Turbotax 1040ez online Example 3. Turbotax 1040ez online Assume the same facts as Example 2, except the debt instrument was issued at $950. Turbotax 1040ez online You must report part of the $50 OID each year because it is more than $25. Turbotax 1040ez online Choice to report all interest as OID. Turbotax 1040ez 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. Turbotax 1040ez online See Constant yield method under Debt Instruments Issued After 1984, later, for more information. Turbotax 1040ez 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. Turbotax 1040ez online For more information, see Regulations section 1. Turbotax 1040ez online 1272-3. Turbotax 1040ez online Purchase after date of original issue. Turbotax 1040ez online   A debt instrument you purchased after the date of original issue may have premium, acquisition premium, or market discount. Turbotax 1040ez online If so, the OID reported to you on Form 1099-OID may have to be adjusted. Turbotax 1040ez online For more information, see Showing an OID adjustment under How To Report OID, later. Turbotax 1040ez online The following rules generally do not apply to contingent payment debt instruments. Turbotax 1040ez online Adjustment for premium. Turbotax 1040ez online   If your debt instrument (other than an inflation-indexed debt instrument) has premium, do not report any OID as ordinary income. Turbotax 1040ez online Your adjustment is the total OID shown on your Form 1099-OID. Turbotax 1040ez online Adjustment for acquisition premium. Turbotax 1040ez online   If your debt instrument has acquisition premium, reduce the OID you report. Turbotax 1040ez 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. Turbotax 1040ez online Adjustment for market discount. Turbotax 1040ez online   If your debt instrument has market discount that you choose to include in income currently, increase the OID you report. Turbotax 1040ez online Your adjustment is the accrued market discount for the year. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online For more information concerning premium or market discount on an inflation-indexed debt instrument, see Regulations section 1. Turbotax 1040ez online 1275-7. Turbotax 1040ez online Sale, exchange, or redemption. Turbotax 1040ez 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. Turbotax 1040ez online If you sold the debt instrument through a broker, you should receive Form 1099-B or an equivalent statement from the broker. Turbotax 1040ez online Use the Form 1099-B or other statement and your brokerage statements to complete Form 8949, and Schedule D (Form 1040). Turbotax 1040ez 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. Turbotax 1040ez online Your basis, generally, is your cost increased by the OID you have included in income each year you held it. Turbotax 1040ez 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. Turbotax 1040ez online   See chapter 4 of Publication 550 for more information about the tax treatment of the sale or redemption of discounted debt instruments. Turbotax 1040ez online Example 4. Turbotax 1040ez online Larry, a calendar year taxpayer, bought a corporate debt instrument at original issue for $86,235. Turbotax 1040ez online 00 on November 1 of Year 1. Turbotax 1040ez online The 15-year debt instrument matures on October 31 of Year 16 at a stated redemption price of $100,000. Turbotax 1040ez online The debt instrument provides for semiannual payments of interest at 10%. Turbotax 1040ez online Assume the debt instrument is a capital asset in Larry's hands. Turbotax 1040ez online The debt instrument has $13,765. Turbotax 1040ez online 00 of OID ($100,000 stated redemption price at maturity minus $86,235. Turbotax 1040ez online 00 issue price). Turbotax 1040ez online Larry sold the debt instrument for $90,000 on November 1 of Year 4. Turbotax 1040ez online Including the OID he will report for the period he held the debt instrument in Year 4, Larry has included $4,556. Turbotax 1040ez online 00 of OID in income and has increased his basis by that amount to $90,791. Turbotax 1040ez online 00. Turbotax 1040ez online Larry has realized a loss of $791. Turbotax 1040ez online 00. Turbotax 1040ez online All of Larry's loss is capital loss. Turbotax 1040ez 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. Turbotax 1040ez online Form 1099-OID shows all OID income in box 1 except OID on a U. Turbotax 1040ez online S. Turbotax 1040ez online Treasury obligation, which is shown in box 8. Turbotax 1040ez online It also shows, in box 2, any qualified stated interest you must include in income. Turbotax 1040ez online (However, any qualified stated interest on Treasury inflation-protected securities can be reported on Form 1099-INT in box 3. Turbotax 1040ez online ) A copy of Form 1099-OID will be sent to the IRS. Turbotax 1040ez online Do not attach your copy to your tax return. Turbotax 1040ez online Keep it for your records. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online Form 1099-OID not received. Turbotax 1040ez 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. Turbotax 1040ez online Refiguring OID. Turbotax 1040ez 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. Turbotax 1040ez online You bought the debt instrument at a premium or at an acquisition premium. Turbotax 1040ez online The debt instrument is a stripped bond or coupon (including zero coupon bonds backed by U. Turbotax 1040ez online S. Turbotax 1040ez online Treasury securities). Turbotax 1040ez online The debt instrument is a contingent payment or inflation-indexed debt instrument. Turbotax 1040ez 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. Turbotax 1040ez online Refiguring interest. Turbotax 1040ez 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. Turbotax 1040ez online Nominee. Turbotax 1040ez 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. Turbotax 1040ez online ” You must file another Form 1099-OID for each actual owner, showing the OID for the owner. Turbotax 1040ez online Show the owner of the debt instrument as the “recipient” and you as the “payer. Turbotax 1040ez online ”   Complete Form 1099-OID and Form 1096 and file the forms with the Internal Revenue Service Center for your area. Turbotax 1040ez online You must also give a copy of the Form 1099-OID to the actual owner. Turbotax 1040ez online However, you are not required to file a nominee return to show amounts belonging to your spouse. Turbotax 1040ez online See the Form 1099 instructions for more information. Turbotax 1040ez online   When preparing your tax return, follow the instructions under Showing an OID adjustment in the next discussion. Turbotax 1040ez 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. Turbotax 1040ez online Form 1040 or Form 1040A required. Turbotax 1040ez online   You must use Form 1040 or Form 1040A (you cannot use Form 1040EZ) under either of the following conditions. Turbotax 1040ez online You received a Form 1099-OID as a nominee for the actual owner. Turbotax 1040ez online Your total interest and OID income for the year was more than $1,500. Turbotax 1040ez online Form 1040 required. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online Also, you must use Form 1040 if you were charged an early withdrawal penalty. Turbotax 1040ez online Where to report. Turbotax 1040ez 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. Turbotax 1040ez online Include all OID and periodic interest shown on any Form 1099-OID, boxes 1, 2, and 8, you received for the tax year. Turbotax 1040ez online Also include any other OID and interest income for which you did not receive a Form 1099. Turbotax 1040ez online Showing an OID adjustment. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online If the OID, as adjusted, is less than the amount shown on Form 1099-OID, show the adjustment as follows. Turbotax 1040ez online Under your last entry on line 1, subtotal all interest and OID income listed on line 1. Turbotax 1040ez online Below the subtotal, write “Nominee Distribution” or “OID Adjustment” and show the OID you are not required to report. Turbotax 1040ez online Subtract that OID from the subtotal and enter the result on line 2. Turbotax 1040ez online If the OID, as adjusted, is more than the amount shown on Form 1099-OID, show the adjustment as follows. Turbotax 1040ez online Under your last entry on line 1, subtotal all interest and OID income listed on line 1. Turbotax 1040ez online Below the subtotal, write “OID Adjustment” and show the additional OID. Turbotax 1040ez online Add that OID to the subtotal and enter the result on line 2. Turbotax 1040ez 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. Turbotax 1040ez online It also may depend on the type of the debt instrument. Turbotax 1040ez online There are different rules for each of the following debt instruments. Turbotax 1040ez online Corporate debt instruments issued after 1954 and before May 28, 1969, and government debt instruments issued after 1954 and before July 2, 1982. Turbotax 1040ez online Corporate debt instruments issued after May 27, 1969, and before July 2, 1982. Turbotax 1040ez online Debt instruments issued after July 1, 1982, and before 1985. Turbotax 1040ez online Debt instruments issued after 1984 (other than debt instruments described in (5) and (6)). Turbotax 1040ez online Contingent payment debt instruments issued after August 12, 1996. Turbotax 1040ez online Inflation-indexed debt instruments (including Treasury inflation-protected securities) issued after January 5, 1997. Turbotax 1040ez online Zero coupon bonds. Turbotax 1040ez online   The rules for figuring OID on zero coupon bonds backed by U. Turbotax 1040ez online S. Turbotax 1040ez online Treasury securities are discussed under Figuring OID on Stripped Bonds and Coupons, later. Turbotax 1040ez 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. Turbotax 1040ez online The OID, which is taxed as ordinary income, generally equals the following amount. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online For information about showing the correct OID on your tax return, see the discussion under How To Report OID, earlier. Turbotax 1040ez online Your basis in the debt instrument is increased by the OID you include in income. Turbotax 1040ez online Form 1099-OID. Turbotax 1040ez online   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. Turbotax 1040ez online However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Turbotax 1040ez online See Reduction for acquisition premium, later. Turbotax 1040ez 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. Turbotax 1040ez online irs. Turbotax 1040ez online gov/pub1212 by clicking the link under Recent Developments. Turbotax 1040ez online Form 1099-OID not received. Turbotax 1040ez online    The OID listed is for each $1,000 of redemption price. Turbotax 1040ez online You must adjust the listed amount if your debt instrument has a different principal amount. Turbotax 1040ez online For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Turbotax 1040ez online   If you held the debt instrument the entire year, use the OID shown in Section I-A for a calendar year. Turbotax 1040ez 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. Turbotax 1040ez online ) If you did not hold the debt instrument the entire year, figure your OID using the following method. Turbotax 1040ez online Divide the OID shown by 12. Turbotax 1040ez 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. Turbotax 1040ez online This is the OID to include in income unless you paid an acquisition premium. Turbotax 1040ez online The reduction for acquisition premium is discussed next. Turbotax 1040ez online Reduction for acquisition premium. Turbotax 1040ez online   If you bought the debt instrument at an acquisition premium, figure the OID to include in income as follows. Turbotax 1040ez 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. Turbotax 1040ez online This is the monthly OID. Turbotax 1040ez online Subtract from your cost the issue price and the accumulated OID from the date of issue to the date of purchase. Turbotax 1040ez online (If the result is zero or less, stop here. Turbotax 1040ez online You did not pay an acquisition premium. Turbotax 1040ez 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. Turbotax 1040ez online Subtract the amount figured in (3) from the amount figured in (1). Turbotax 1040ez online This is the OID to include in income for each month you hold the debt instrument during the year. Turbotax 1040ez online Transfers during the month. Turbotax 1040ez 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. Turbotax 1040ez online Your holding period for this purpose begins the day you acquire the debt instrument and ends the day before you dispose of it. Turbotax 1040ez 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. Turbotax 1040ez online For information about showing the correct OID on your tax return, see How To Report OID, earlier. Turbotax 1040ez online Form 1099-OID. Turbotax 1040ez online   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. Turbotax 1040ez online However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Turbotax 1040ez online See Constant yield method and the discussions on acquisition premium that follow, later. Turbotax 1040ez 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. Turbotax 1040ez online irs. Turbotax 1040ez online gov/pub1212 by clicking the link under Recent Developments. Turbotax 1040ez online Form 1099-OID not received. Turbotax 1040ez online    The OID listed is for each $1,000 of redemption price. Turbotax 1040ez online You must adjust the listed amount if your debt instrument has a different principal amount. Turbotax 1040ez online For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Turbotax 1040ez online   If you held the debt instrument the entire year, use the OID shown in Section I-A. Turbotax 1040ez 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. Turbotax 1040ez online ) If you did not hold the debt instrument the entire year, figure your OID using either of the following methods. Turbotax 1040ez online Method 1. Turbotax 1040ez online    Divide the total OID for a calendar year by 365 (366 for leap years). Turbotax 1040ez online Multiply the result in (1) by the number of days you held the debt instrument during that particular year. Turbotax 1040ez online  This computation is an approximation and may result in a slightly higher OID than Method 2. Turbotax 1040ez online Method 2. Turbotax 1040ez online    Look up the daily OID for the first accrual period you held the debt instrument during a calendar year. Turbotax 1040ez online (See Accrual period under Constant yield method, next. Turbotax 1040ez online ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. Turbotax 1040ez online If you held the debt instrument for part of both accrual periods, repeat (1) and (2) for the second accrual period. Turbotax 1040ez online Add the results of (2) and (3). Turbotax 1040ez online This is the OID to include in income, unless you paid an acquisition premium. Turbotax 1040ez online (The reduction for acquisition premium is discussed later. Turbotax 1040ez online ) Constant yield method. Turbotax 1040ez online   This discussion shows how to figure OID on debt instruments issued after July 1, 1982, and before 1985, using a constant yield method. Turbotax 1040ez online OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. Turbotax 1040ez online   Figure the OID allocable to any accrual period as follows. Turbotax 1040ez online Multiply the adjusted issue price at the beginning of the accrual period by the debt instrument's yield to maturity. Turbotax 1040ez online Subtract from the result in (1) any qualified stated interest allocable to the accrual period. Turbotax 1040ez online Accrual period. Turbotax 1040ez 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. Turbotax 1040ez online Your tax year will usually include parts of two accrual periods. Turbotax 1040ez online Daily OID. Turbotax 1040ez online   The OID for any accrual period is allocated equally to each day in the accrual period. Turbotax 1040ez online You must include in income the sum of the OID amounts for each day you hold the debt instrument during the year. Turbotax 1040ez 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. Turbotax 1040ez online Figuring daily OID. Turbotax 1040ez online   The daily OID for the initial accrual period is figured using the following formula. Turbotax 1040ez 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. Turbotax 1040ez online Reduction for acquisition premium on debt instruments purchased before July 19, 1984. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online Reduction for acquisition premium on debt instruments purchased after July 18, 1984. Turbotax 1040ez 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. Turbotax 1040ez online However, the method of figuring the daily acquisition premium is different from the method described in the preceding discussion. Turbotax 1040ez online To figure the daily acquisition premium under this method, multiply the daily OID by the following fraction. Turbotax 1040ez online The numerator is the acquisition premium. Turbotax 1040ez online The denominator is the total OID remaining for the debt instrument after your purchase date. Turbotax 1040ez online Section I-A is available at www. Turbotax 1040ez online irs. Turbotax 1040ez online gov/pub1212 and clicking the link under Recent Developments. Turbotax 1040ez online Using Section I-A to figure accumulated OID. Turbotax 1040ez 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. Turbotax 1040ez online The amount from the “Total OID to January 1, YYYY” column for your debt instrument. Turbotax 1040ez online The OID from January 1 of a calendar year to the date of purchase, figured as follows. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online Add the amounts figured in (2a) and (2b). Turbotax 1040ez 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. Turbotax 1040ez online You must include the OID in gross income whether or not you hold the debt instrument as a capital asset. Turbotax 1040ez online Your basis in the debt instrument is increased by the OID you include in income. Turbotax 1040ez online For information about showing the correct OID on your tax return, see How To Report OID, earlier. Turbotax 1040ez online Form 1099-OID. Turbotax 1040ez online   You should receive a Form 1099-OID showing OID for the part of a calendar year you held the debt instrument. Turbotax 1040ez online However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Turbotax 1040ez online See Constant yield method and Reduction for acquisition premium, later. Turbotax 1040ez 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. Turbotax 1040ez online See Contingent Payment Debt Instruments or Inflation-Indexed Debt Instruments, later. Turbotax 1040ez 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. Turbotax 1040ez online irs. Turbotax 1040ez online gov/pub1212 by clicking the link under Recent Developments. Turbotax 1040ez online Form 1099-OID not received. Turbotax 1040ez online   The OID listed is for each $1,000 of redemption price. Turbotax 1040ez online You must adjust the listed amount if your debt instrument has a different principal amount. Turbotax 1040ez online For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Turbotax 1040ez online   Use the OID shown in Section I-B for a calendar year if you held the debt instrument the entire year. Turbotax 1040ez 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. Turbotax 1040ez online ) If you did not hold the debt instrument the entire year, figure your OID as follows. Turbotax 1040ez online Look up the daily OID for the first accrual period in which you held the debt instrument during a calendar year. Turbotax 1040ez online (See Accrual period under Constant yield method, later. Turbotax 1040ez online ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. Turbotax 1040ez online Repeat (1) and (2) for any remaining accrual periods in which you held the debt instrument. Turbotax 1040ez online Add the results of (2) and (3). Turbotax 1040ez online This is the OID to include in income for that year, unless you paid an acquisition premium. Turbotax 1040ez online (The reduction for acquisition premium is discussed later. Turbotax 1040ez online ) Tax-exempt bond. Turbotax 1040ez 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. Turbotax 1040ez online You need to make this adjustment to determine if you have a gain or loss on a later disposition of the bond. Turbotax 1040ez online In general, use the rules that follow to determine your OID. Turbotax 1040ez online Constant yield method. Turbotax 1040ez online   This discussion shows how to figure OID on debt instruments issued after 1984 using a constant yield method. Turbotax 1040ez online (The special rules that apply to contingent payment debt instruments and inflation-indexed debt instruments are explained later. Turbotax 1040ez online ) OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. Turbotax 1040ez online   Figure the OID allocable to any accrual period as follows. Turbotax 1040ez online Multiply the adjusted issue price at the beginning of the accrual period by a fraction. Turbotax 1040ez 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. Turbotax 1040ez online The yield must be stated appropriately taking into account the length of the particular accrual period. Turbotax 1040ez online Subtract from the result in (1) any qualified stated interest allocable to the accrual period. Turbotax 1040ez online Accrual period. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online Any short period is included as the first accrual period. Turbotax 1040ez 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. Turbotax 1040ez online However, the OID listed for these debt instruments in Section I-B has been figured using 6-month accrual periods. Turbotax 1040ez online Daily OID. Turbotax 1040ez online   The OID for any accrual period is allocated equally to each day in the accrual period. Turbotax 1040ez online Figure the amount to include in income by adding the OID for each day you hold the debt instrument during the year. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online Figuring daily OID. Turbotax 1040ez online   The daily OID for the initial accrual period is figured using the following formula. Turbotax 1040ez 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. Turbotax 1040ez online Example 5. Turbotax 1040ez online On January 1 of Year 1, you bought a 15-year, 10% debt instrument of A Corporation at original issue for $86,235. Turbotax 1040ez online 17. Turbotax 1040ez online According to the prospectus, the debt instrument matures on December 31 of Year 15 at a stated redemption price of $100,000. Turbotax 1040ez online The yield to maturity is 12%, compounded semiannually. Turbotax 1040ez online The debt instrument provides for qualified stated interest payments of $5,000 on June 30 and December 31 of each calendar year. Turbotax 1040ez online The accrual periods are the 6-month periods ending on each of these dates. Turbotax 1040ez online The number of days for the first accrual period (January 1 through June 30) is 181 days (182 for leap years). Turbotax 1040ez online The daily OID for the first accrual period is figured as follows. Turbotax 1040ez online   ($86,235. Turbotax 1040ez online 17 x . Turbotax 1040ez online 12/2) – $5,000     181 days     = $174. Turbotax 1040ez online 11020 = $. Turbotax 1040ez 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. Turbotax 1040ez online 17 + $174. Turbotax 1040ez online 11), or $86,409. Turbotax 1040ez online 28. Turbotax 1040ez online The number of days for the second accrual period (July 1 through December 31) is 184 days. Turbotax 1040ez online The daily OID for the second accrual period is figured as follows. Turbotax 1040ez online   ($86,409. Turbotax 1040ez online 28 x . Turbotax 1040ez online 12/2) – $5,000     184 days     = $184. Turbotax 1040ez online 55681 = $1. Turbotax 1040ez 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, $174. Turbotax 1040ez online 11 ($. Turbotax 1040ez online 95665 × 182 days) plus $184. Turbotax 1040ez online 56 ($1. Turbotax 1040ez online 00303 × 184 days), or $358. Turbotax 1040ez online 67. Turbotax 1040ez online Add the OID to the $10,000 interest you report on your income tax return for Year 1. Turbotax 1040ez online Example 6. Turbotax 1040ez 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. Turbotax 1040ez online Also, the interest payment dates are October 31 and April 30 of each calendar year. Turbotax 1040ez online The accrual periods are the 6-month periods ending on each of these dates. Turbotax 1040ez online The number of days for the first accrual period (May 1 through October 31) is 184 days. Turbotax 1040ez online The daily OID for the first accrual period is figured as follows. Turbotax 1040ez online   ($86,235. Turbotax 1040ez online 17 x . Turbotax 1040ez online 12/2) – $5,000     184 days     = $174. Turbotax 1040ez online 11020 = $. Turbotax 1040ez online 94625   184           The number of days for the second accrual period (November 1 through April 30) is 181 days (182 for leap years). Turbotax 1040ez online The daily OID for the second accrual period is figured as follows. Turbotax 1040ez online   ($86,409. Turbotax 1040ez online 28 x . Turbotax 1040ez online 12/2) – $5,000     181 days     = $184. Turbotax 1040ez online 55681 = $1. Turbotax 1040ez online 01965   181 If you hold the debt instrument through the end of Year 1, you must include $236. Turbotax 1040ez online 31 of OID in income. Turbotax 1040ez online This is $174. Turbotax 1040ez online 11 ($. Turbotax 1040ez online 94625 × 184 days) for the period May 1 through October 31 plus $62. Turbotax 1040ez online 20 ($1. Turbotax 1040ez online 01965 × 61 days) for the period November 1 through December 31. Turbotax 1040ez online The OID is added to the $5,000 interest income paid on October 31 of Year 1. Turbotax 1040ez online Your basis in the debt instrument is increased by the OID you include in income. Turbotax 1040ez online On January 1 of Year 2, your basis in the A Corporation debt instrument is $86,471. Turbotax 1040ez online 48 ($86,235. Turbotax 1040ez online 17 + $236. Turbotax 1040ez online 31). Turbotax 1040ez online Short first accrual period. Turbotax 1040ez online   You may have to make adjustments if a debt instrument has a short first accrual period. Turbotax 1040ez 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. Turbotax 1040ez online (The remaining accrual periods begin on May 1 and November 1. Turbotax 1040ez online ) For this short period, figure the daily OID as described earlier, but adjust the yield for the length of the short accrual period. Turbotax 1040ez online You may use any reasonable compounding method in determining OID for a short period. Turbotax 1040ez online Examples of reasonable compounding methods include continuous compounding and monthly compounding (that is, simple interest within a month). Turbotax 1040ez online Consult your tax advisor for more information about making this computation. Turbotax 1040ez 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. Turbotax 1040ez online Reduction for acquisition premium. Turbotax 1040ez 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. Turbotax 1040ez online To figure the daily acquisition premium, multiply the daily OID by the following fraction. Turbotax 1040ez online The numerator is the acquisition premium. Turbotax 1040ez online The denominator is the total OID remaining for the debt instrument after your purchase date. Turbotax 1040ez online Example 7. Turbotax 1040ez 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. Turbotax 1040ez online The adjusted issue price on November 1 of Year 1 is $86,409. Turbotax 1040ez online 28 ($86,235. Turbotax 1040ez online 17 + $174. Turbotax 1040ez online 11). Turbotax 1040ez online In this case, you paid an acquisition premium of $590. Turbotax 1040ez online 72 ($87,000 − $86,409. Turbotax 1040ez online 28). Turbotax 1040ez online The daily OID for the accrual period November 1 through April 30, reduced for the acquisition premium, is figured as follows. Turbotax 1040ez online 1) Daily OID on date of purchase (2nd accrual period) $1. Turbotax 1040ez online 01965*  2)  Acquisition premium $590. Turbotax 1040ez online 72    3)  Total OID remaining after purchase date ($13,764. Turbotax 1040ez online 83 − $174. Turbotax 1040ez online 11) 13,590. Turbotax 1040ez online 72   4) Line 2 ÷ line 3 . Turbotax 1040ez online 04346  5)  Line 1 × line 4 . Turbotax 1040ez online 04432  6)  Daily OID reduced for the acquisition premium. Turbotax 1040ez online Line 1 − line 5 $0. Turbotax 1040ez online 97533  * As shown in Example 6. Turbotax 1040ez online The total OID to include in income for Year 1 is $59. Turbotax 1040ez online 50 ($. Turbotax 1040ez online 97533 × 61 days). Turbotax 1040ez 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. Turbotax 1040ez online In general, a contingent payment debt instrument provides for one or more payments that are contingent as to timing or amount. Turbotax 1040ez online If you hold a contingent payment bond, you must report OID as it accrues each year. Turbotax 1040ez 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. Turbotax 1040ez online To figure OID accruals on contingent payment debt instruments, holders and issuers must use the noncontingent bond method. Turbotax 1040ez online Noncontingent bond method. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online When a contingent payment differs from the projected fixed amount, the holders and issuers make adjustments to their OID accruals. Turbotax 1040ez online If the actual contingent payment is larger than expected, both the issuer and the holder increase their OID accruals. Turbotax 1040ez online If the actual contingent payment is smaller than expected, holders and issuers generally decrease their OID accruals. Turbotax 1040ez online Form 1099-OID. Turbotax 1040ez 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. Turbotax 1040ez online For example, the amount may not be correct if the contingent payment was different from the projected amount. Turbotax 1040ez online If the amount in box 1 is not correct, you must figure the OID to report on your return under the following rules. Turbotax 1040ez online For information on showing an OID adjustment on your tax return, see How To Report OID, earlier. Turbotax 1040ez online Figuring OID. Turbotax 1040ez 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. Turbotax 1040ez online The issuer must make these available to you. Turbotax 1040ez online Comparable yield. Turbotax 1040ez 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. Turbotax 1040ez online The comparable yield is determined as of the debt instrument's issue date. Turbotax 1040ez online Projected payment schedule. Turbotax 1040ez 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. Turbotax 1040ez online The projected payment schedule is created by the issuer as of the debt instrument's issue date. Turbotax 1040ez online It is used to determine the issuer's and holder's interest accruals and adjustments. Turbotax 1040ez online Steps for figuring OID. Turbotax 1040ez online   Figure the OID on a contingent payment debt instrument in two steps. Turbotax 1040ez online Figure the OID using the constant yield method (discussed earlier under Debt Instruments Issued After 1984 ) that applies to fixed payment debt instruments. Turbotax 1040ez online Use the comparable yield as the yield to maturity. Turbotax 1040ez 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). Turbotax 1040ez online Do not treat any amount payable as qualified stated interest. Turbotax 1040ez online Adjust the OID in (1) to account for actual contingent payments. Turbotax 1040ez online If the contingent payment is greater than the projected fixed amount, you have a positive adjustment. Turbotax 1040ez online If the contingent payment is less than the projected fixed amount, you have a negative adjustment. Turbotax 1040ez online Net positive adjustment. Turbotax 1040ez 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. Turbotax 1040ez online Treat a net positive adjustment as additional OID for the tax year. Turbotax 1040ez online Net negative adjustment. Turbotax 1040ez 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. Turbotax 1040ez online Use a net negative adjustment to offset OID on the debt instrument for the tax year. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online Basis adjustments. Turbotax 1040ez online   In general, increase your basis in a contingent payment debt instrument by the OID included in income. Turbotax 1040ez online Your basis, however, is not affected by any negative or positive adjustments. Turbotax 1040ez online Decrease your basis by any noncontingent payment received and the projected contingent payment scheduled to be received. Turbotax 1040ez online Treatment of gain or loss on sale or exchange. Turbotax 1040ez 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. Turbotax 1040ez 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. Turbotax 1040ez online If the debt instrument is a capital asset, treat any loss that is more than your prior OID accruals as a capital loss. Turbotax 1040ez online See Regulations section 1. Turbotax 1040ez online 1275-4 for exceptions to these rules. Turbotax 1040ez online Premium, acquisition premium, and market discount. Turbotax 1040ez online   The rules for accruing premium, acquisition premium, and market discount do not apply to a contingent payment debt instrument. Turbotax 1040ez online See Regulations section 1. Turbotax 1040ez online 1275-4 to determine how to account for these items. Turbotax 1040ez online Inflation-Indexed Debt Instruments This discussion shows how you figure OID on certain inflation-indexed debt instruments issued after January 5, 1997. Turbotax 1040ez online An inflation-indexed debt instrument is generally a debt instrument on which the payments are adjusted for inflation and d