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Guide To Original Issue Discount (OID) Instruments: Publication 1212
Guide To Original Issue Discount (OID) Instruments: Publication 1212
Guide to
of the Photographs of Missing Children . . . . . 1
Treasury
Internal Introduction . . . . . . . . . . . . . . . . . . 1
Revenue
Service Original Definitions . . . . . . . . . . . . . . . . . . . 2
Issue
Debt Instruments on the OID List . . . . . 3
Instruments Middlemen . . . . . . . . . . . .
Short-Term Obligations
Redeemed at Maturity . . . .
.... 3
. . . . 3
Long-Term Debt Instruments . . . . . . 4
Certificates of Deposit . . . . . . . . . . 4
Bearer Bonds and Coupons . . . . . . . 4
Backup Withholding . . . . . . . . . . . 4
Index . . . . . . . . . . . . . . . . . . . . . 17
Future Developments
For the latest information about developments
related to Pub. 1212, such as legislation
enacted after it was published, go to
www.irs.gov/pub1212.
Photographs of Missing
Children
The Internal Revenue Service is a proud partner
with the National Center for Missing and
Exploited Children. Photographs of missing
children selected by the Center may appear in
this publication on pages that would otherwise
be blank. You can help bring these children
home by looking at the photographs and calling
1-800-THE-LOST (1-800-843-5678) if you
recognize a child.
Introduction
This publication has two purposes. Its primary
purpose is to help brokers and other middlemen
identify publicly offered original issue discount
(OID) debt instruments they may hold as nomi-
nees for the true owners, so they can file Forms
Get forms and other information faster and easier at: 1099-OID or Forms 1099-INT as required. The
IRS.gov (English) IRS.gov/Korean ()
IRS.gov/Spanish (Espaol) IRS.gov/Russian (P)
IRS.gov/Chinese () IRS.gov/Vietnamese (TingVit)
Showing an OID adjustment under How To Re- Your gain or loss is the difference between these amounts on your return. A 20% accu-
port OID, later. If your debt instrument is a cov- the amount you realized on the sale, exchange, racy-related penalty may be charged for under-
ered security under Regulations section or redemption and your basis in the debt instru- payment of tax due to either negligence or dis-
1.6045-1(a)(15), market discount, acquisition ment. Your basis, generally, is your cost in- regard of rules and regulations or substantial
premium, or premium is reported in box 5, 6 or creased by the OID you have included in in- understatement of tax.
10 of Form 1099-OID, respectively. The follow- come each year you held it. In general, to
ing rules generally do not apply to contingent determine your gain or loss on a tax-exempt Form 1099OID not received. If you held an
payment debt instruments. bond, figure your basis in the bond by adding to OID debt instrument for a calendar year but did
your cost the OID you would have included in not receive a Form 1099-OID, refer to the dis-
Adjustment for premium. If your debt in-
income if the bond had been taxable. For a cov- cussions under Figuring OID on Long-Term
strument (other than an inflation-indexed debt
ered security, your broker will report the adjus- Debt Instruments, later, for information on the
instrument) has premium, do not report any OID
ted basis of the debt instrument to you on Form OID you must report.
as ordinary income. Your adjustment is the total
1099-B.
OID shown on your Form 1099-OID.
See chapter 4 of Publication 550 for more Refiguring OID. You may need to refigure the
Adjustment for acquisition premium. If information about the tax treatment of the sale OID shown on Form 1099-OID, in box 1 or
your debt instrument has acquisition premium, or redemption of discounted debt instruments. box 8, to determine the proper amount to in-
reduce the OID you report. Your adjustment is clude in income if one of the following applies.
the difference between the OID shown on your Example 4. Larry, a calendar year tax- You bought the debt instrument at a pre-
Form 1099-OID and the reduced OID amount payer, bought a corporate debt instrument at mium or at an acquisition premium. How-
figured using the rules explained later under original issue for $86,235.00 on November 1 of ever, if you bought a covered security at an
Figuring OID on Long-Term Debt Instruments. If Year 1. The 15-year debt instrument matures on acquisition premium, you may not have to
your debt instrument is a covered security un- October 31 of Year 16 at a stated redemption refigure the OID if your broker reported a
der Regulations section 1.6045-1(a)(15), your price of $100,000. The debt instrument pro- net adjusted amount of OID in box 1 or
vides for semiannual payments of interest at
ap x (1 + ytm /n) ap
r How To Get Tax Help
If you have questions about a tax issue, need
help preparing your tax return, or want to down-
load free publications, forms, or instructions, go
to IRS.gov and find resources that can help you
right away.