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Instruments (OID) Issue Discount Guide to Original

ContentsFuture s Instruments on the OID Instruments Not on the OID for Brokers and Other Obligations Redeemed at Debt of Bonds and for Owners of OID Debt To Report OID on Long-Term Debt OID on Stripped Bonds and To Get Tax DevelopmentsFor the latest information about developments related to Pub. 1212, such as legislation enacted after it was published, go to s NewBackup withholding rate change. 115-97 lowered the backup withholding rate from 28% to 24%. For more information, see Backup Withholding, 1040 filing requirement. If you are re-quired to report OID, you must file Form 1040. As the IRS isn t developing Forms 1040A or 1040EZ for 2018, you can t use those forms to report OID. See How To Report OID, of Missing ChildrenThe IRS is a proud partner with the National Center for Missing & Exploited Children (NCEMC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank.

of interest. It is the excess of a debt instru-ment's stated redemption price at maturity over its issue price (acquisition price for a stripped bond or coupon). Zero coupon bonds and debt instruments that pay no stated interest until ma-turity are examples of debt instruments that have OID. Accrual period. An accrual period is an inter-

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Transcription of Instruments (OID) Issue Discount Guide to Original

1 ContentsFuture s Instruments on the OID Instruments Not on the OID for Brokers and Other Obligations Redeemed at Debt of Bonds and for Owners of OID Debt To Report OID on Long-Term Debt OID on Stripped Bonds and To Get Tax DevelopmentsFor the latest information about developments related to Pub. 1212, such as legislation enacted after it was published, go to s NewBackup withholding rate change. 115-97 lowered the backup withholding rate from 28% to 24%. For more information, see Backup Withholding, 1040 filing requirement. If you are re-quired to report OID, you must file Form 1040. As the IRS isn t developing Forms 1040A or 1040EZ for 2018, you can t use those forms to report OID. See How To Report OID, of Missing ChildrenThe IRS is a proud partner with the National Center for Missing & Exploited Children (NCEMC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank.

2 You can help bring these children home by looking at the photographs and calling Department of the TreasuryInternal Revenue ServicePublication 1212(Rev. January 2019)Cat. No. 61273 TGuide toOriginalIssueDiscount (OID)InstrumentsGet forms and other information faster and easier at: (English) (Espa ol) ( ) ( ) (Pусский) (Ti ngVi t) Userid: CPMS chema: tipxLeadpct: 100%Pt. size: 8 Draft Ok to PrintAH XSL/XMLF ileid: .. ns/P1212/201901/A/XML/Cycle06/source(Ini t. & Date) _____Page 1 of 17 7:52 - 16-Jan-2019 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before 16, 20191-800-THE-LOST (1-800-843-5678) if you recognize a 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 1099-OID or Forms 1099-INT, as required.

3 The other purpose of the publication is to help own-ers of publicly offered OID debt Instruments de-termine how much OID to report on their in-come tax list of publicly offered OID debt instru -ments (OID list) is on the IRS website. The origi-nal Issue Discount tables, Sections I-A through III-F, are only available on the IRS website at by clicking the link under Re-cent Developments. The tables are posted to the website in late November or early Decem-ber of each year. The information on these lists comes from the issuers of the debt Instruments and from financial publications and is updated annually. (However, see Debt Instruments Not on the OID List, later.)Brokers and other middlemen can rely on this list to determine, for information reporting purposes, whether a debt instrument was is-sued at a Discount and the OID to be reported on information returns. However, because the information in the list has generally not been verified by the IRS as correct, the following tax matters are subject to change upon examina-tion by the IRS.

4 The OID reported by owners of a debt in-strument on their income tax returns. The issuer's classification of an instrument as debt for federal income tax purposes. The adjusted basis of a debt for issuers of OID debt instru -ments. In general, issuers of publicly offered OID debt Instruments must, within 30 days after the Issue date, report information about the in-struments to the IRS on Form 8281. In addition, Form 8281 must be filed for a debt instrument that is part of an Issue the offering of which is registered with the Securities and Exchange Commission after the Issue date of the debt in-strument and such registration occurs on or af-ter January 1, 2014. See the form instructions for more should report errors in and omissions from the list in writing at the following address:IRS OID Publication ProjectSE:W:CAR:MP:TFP1111 Constitution Ave. NW, IR-6526 Washington, DC 20224 REMIC and CDO information reporting re-quirements. Brokers and other middlemen must follow special information reporting re-quirements for real estate mortgage investment conduit (REMIC) regular interests, and collater-alized debt obligations (CDO) interests.

5 The rules are explained in Pub. of interests in REMICs and CDOs should see chapter 1 of Pub. 550 for informa-tion on REMICs and and suggestions. We welcome your comments about this publication and your suggestions for future can send us comments through Or you can write to:Internal Revenue ServiceTax Forms and Publications1111 Constitution Ave. NW, IR-6526 Washington, DC 20224 Although we can t respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and forms and publications. Visit to download forms and publications. Otherwise, you can go to to order current and prior-year forms and instructions. Your order should arrive within 10 business questions. If you have a tax question not answered by this publication, check and How To Get Tax Help at the end of this ItemsYou may want to see:Publication515 Withholding of Tax on Nonresident Aliens and Foreign Entities550 Investment Income and Expenses938 Real Estate Mortgage Investment Conduits (REMICs) Reporting Information (And Other Collateralized Debt Obligations (CDOs)).

6 Form (and Instructions)1096 Annual Summary and Transmittal of Information Returns1099-B Proceeds From Broker and Barter Exchange Transactions1099-INT Interest Income1099-OID Original Issue Discount8949 Sales and Other Dispositions of Capital AssetsSchedule B (Form 1040) Interest and Ordinary DividendsSchedule D (Form 1040) Capital Gains and LossesW-8 Instructions for the Requester of Forms W-8 BEN, W-8 ECI, W-8 EXP, and W-8 IMYSee How To Get Tax Help at the end of this publication for information about getting publi-cations and following terms are used throughout this publication. Original Issue Discount is defined first. The other terms are listed alphabetically. 515 550 938 1096 1099-B 1099-INT 1099-OID 8949 Schedule B (Form 1040) Schedule D (Form 1040) W-8 Original Issue Discount (OID). OID is a form of interest. It is the excess of a debt instru - ment 's stated redemption price at maturity over its Issue price (acquisition price for a stripped bond or coupon).

7 Zero coupon bonds and debt Instruments that pay no stated interest until ma-turity are examples of debt Instruments that have period. An accrual period is an inter-val of time used to measure OID. The length of an accrual period can be 6 months, a year, or some other period no longer than 1 year, de-pending on when the debt instrument was premium. Acquisition premium is the excess of a debt instrument's adjusted ba-sis immediately after purchase, including pur-chase at Original Issue , over the debt instru - ment 's adjusted Issue price at that time. A debt instrument does not have acquisition premium, however, if the debt instrument was purchased at a premium. See Premium, Issue price. The adjusted Issue price of a debt instrument at the beginning of an accrual period is used to figure the OID alloca-ble to that period. In general, the adjusted Issue price at the beginning of the debt instrument's first accrual period is its Issue price.

8 The adjus-ted Issue price at the beginning of any subse-quent accrual period is the sum of the Issue price and all the OID includible in income before that accrual period minus any payment previ-ously made on the debt instrument, other than a payment of qualified stated instrument. The term debt instrument means any instrument or contractual arrange- ment that constitutes indebtedness under gen-eral principles of federal income tax law (includ-ing, for example, a bond, debenture, note, certificate, or other evidence of indebtedness). It generally does not include an annuity price. For debt Instruments listed in Section I-A and Section I-B, the Issue price gen-erally is the initial offering price to the public (ex-cluding bond houses and brokers) at which a substantial amount of these Instruments was Discount . A debt instrument generally is acquired with market Discount if its stated re-demption price at maturity is greater than its ba-sis immediately after its acquisition.

9 Market dis-count arises when a debt instrument purchased in the secondary market has decreased in value since its Issue date, generally because of an in-crease in interest rates. An OID debt instrument has market Discount if your adjusted basis in the debt instrument immediately after you ac-quired it (usually its purchase price) was less than the debt instrument's Issue price plus the total OID that accrued before you acquired it. The market Discount is the difference between the Issue price plus accrued OID and your ad-justed A debt instrument is purchased at a premium if its adjusted basis immediately after purchase is greater than the total of all amounts Page 2 of 17 Fileid: .. ns/P1212/201901/A/XML/Cycle06/source7:52 - 16-Jan-2019 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before 2 Publication 1212 (January 2019)payable on the debt instrument after the pur-chase date, other than qualified stated interest.

10 The premium is the excess of the adjusted ba-sis over the payable amounts. See Pub. 550 for information on the tax treatment of bond stated interest. In general, qualified stated interest is stated interest that is uncondi-tionally 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 redemption price at maturity. 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 to maturity (YTM). 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 is-sue price of the debt instrument. The YTM is generally shown on the face of the debt instru - ment or in the literature you receive from your broker. If you do not have this information, con-sult your broker, tax advisor, or the Instrumentson the OID ListThe OID list on the IRS website can be used by brokers and other middlemen to prepare infor-mation you own a listed debt instrument, you generally should not rely on the infor-mation in the OID list to determine (or compare) the OID to be reported on your tax re-turn.


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