We have a client that purchased an investment that was giving 1099-INT OID. He has held it for five years (still owns it), and the total OID (including 2011) is 5,025. The 2011 1099 shows OID shortfall of 5,250. Thus, he will not be receiving the projected OID of 5,025.

Why would the shortfall be more than the OID he has filed for?

We are going to claim the shortfall (OID adjustment) which will wipe out this years and all previous years OID. I assume we should only claim the 5,025 since that is all the OID he has been taxed on.

What happens to the extra $200 shortfall?

Thanks,
Mike