Contingent Payment Market Linked

[marlenew]

Client bought a $60,000 Wells Fargo Bank CD linked to Dow Jones Inds July 2012 ... July 2019 Redemption.
Each year there was OID interest reported (varied $800 - $900) and for 2019 there is Other Periodic Interest of $23,630.00 described as Contingent Payment MLCD Excess.
I would like confirmation that I am correct in reporting the $23,630 as interest income in 2019 as well as having reported the OID each year. If anyone can explain this, I would appreciate it.

[Grace]

I had a similar situation this year. Start by finding out the actual amount the client invested and what the client received at maturity. Then go back and add up all the interest reported on the returns (2012 - 2018). Subtract that total from the gain on the investment and the difference would be the amount of $23,630 that has to be reported in 2019. You may have to input an OID adjustment on the 1099-INT in your software.

Here's the way mine worked out TP invested 100k and received 117k at maturity. Had originally reported 8k (2012 - 2018). The 2019 document showed 9,300. The 9,300 was entered into Box 1 1099-INT Box with an OID adjustment of 300. Client only got 17k gain at maturity, not 17,300.

Hope this helps..

Grace