1099-OID Question

[LCP]

Instructions below but they aren't clear to me. If Box 1 and Box 2 are the same amount are they both income or does one explain the other such that it is only reportable as income once?



Box 1. Original Issue Discount for 2014

Report the OID on the obligation for the part of the year it was owned by the record holder. Do not include the amount reported in box 8. For a discussion of WHFITs, WHMTs, REMICs, FASITs, and CDOs, see the instructions later.

Box 2. Other Periodic Interest

Enter any qualified stated interest paid or credited on this obligation during the year. However, you may report any qualified stated interest on Treasury Inflation Protected Securities in box 3 of Form 1099-INT rather than in box 2 of Form 1099-OID. Interest reported here must not be reported on Form 1099-INT. For a discussion of REMICs, FASITs, and CDOs, see the instructions, later.

[buzzardbreath]

Help us Out

I believe you are presenting instructions to the issuer.

Are you having to issue a 1099-OID, or are you preparing a tax return for a client who is bringing you a 1099-OID?

For all practical purposes, the taxable amount on the 1099-OID (even if it is a municipal bond) is reported as Interest Income.

[LCP]

I'm dealing with the recipient.

[buzzardbreath]

All is interest

Box 1, Box 2, and Box 8 should be reported simply as Interest Income. Make sure none of the amounts duplicate each other.

This should be straightforward unless the holder did not own the bond for the duration of the year. If not, the calculation is complicated and beyond discussion here. But the calculation is do-able once you can familiarize yourself with the compounded formula. Sometimes the issuer will send a 1099-OID to the bondowner of record as of year - end, that's why the amount could be wrong.