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Www Irs Gov Form 1040x Instructions

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Www Irs Gov Form 1040x Instructions

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The Www Irs Gov Form 1040x Instructions

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