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How To File An Amendment To 2011 Taxes

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How To File An Amendment To 2011 Taxes

How to file an amendment to 2011 taxes Publication 1212 - Main Content Table of Contents Definitions Debt Instruments on the OID List Debt Instruments Not on the OID List Information for Brokers and Other MiddlemenShort-Term Obligations Redeemed at Maturity Long-Term Debt Instruments Certificates of Deposit Bearer Bonds and Coupons Backup Withholding Information for Owners of OID Debt InstrumentsExceptions. How to file an amendment to 2011 taxes Adjustment for premium. How to file an amendment to 2011 taxes Adjustment for acquisition premium. How to file an amendment to 2011 taxes Adjustment for market discount. How to file an amendment to 2011 taxes Form 1099-OID How To Report OID Figuring OID on Long-Term Debt Instruments Figuring OID on Stripped Bonds and Coupons How To Get Tax HelpLow Income Taxpayer Clinics Definitions The following terms are used throughout this publication. How to file an amendment to 2011 taxes “Original issue discount” is defined first. How to file an amendment to 2011 taxes The other terms are listed alphabetically. How to file an amendment to 2011 taxes Original issue discount (OID). How to file an amendment to 2011 taxes   OID is a form of interest. How to file an amendment to 2011 taxes It is the excess of a debt instrument's stated redemption price at maturity over its issue price (acquisition price for a stripped bond or coupon). How to file an amendment to 2011 taxes Zero coupon bonds and debt instruments that pay no stated interest until maturity are examples of debt instruments that have OID. How to file an amendment to 2011 taxes Accrual period. How to file an amendment to 2011 taxes   An accrual period is an interval of time used to measure OID. How to file an amendment to 2011 taxes The length of an accrual period can be 6 months, a year, or some other period, depending on when the debt instrument was issued. How to file an amendment to 2011 taxes Acquisition premium. How to file an amendment to 2011 taxes   Acquisition premium is the excess of a debt instrument's adjusted basis immediately after purchase, including purchase at original issue, over the debt instrument's adjusted issue price at that time. How to file an amendment to 2011 taxes A debt instrument does not have acquisition premium, however, if the debt instrument was purchased at a premium. How to file an amendment to 2011 taxes See Premium, later. How to file an amendment to 2011 taxes Adjusted issue price. How to file an amendment to 2011 taxes   The adjusted issue price of a debt instrument at the beginning of an accrual period is used to figure the OID allocable to that period. How to file an amendment to 2011 taxes In general, the adjusted issue price at the beginning of the debt instrument's first accrual period is its issue price. How to file an amendment to 2011 taxes The adjusted issue price at the beginning of any subsequent accrual period is the sum of the issue price and all the OID includible in income before that accrual period minus any payment previously made on the debt instrument, other than a payment of qualified stated interest. How to file an amendment to 2011 taxes Debt instrument. How to file an amendment to 2011 taxes   The term “debt instrument” means any instrument or contractual arrangement that constitutes indebtedness under general principles of federal income tax law (including, for example, a bond, debenture, note, certificate, or other evidence of indebtedness). How to file an amendment to 2011 taxes It generally does not include an annuity contract. How to file an amendment to 2011 taxes Issue price. How to file an amendment to 2011 taxes   For debt instruments listed in Section I-A and Section I-B, the issue price generally is the initial offering price to the public (excluding bond houses and brokers) at which a substantial amount of these instruments was sold. How to file an amendment to 2011 taxes Market discount. How to file an amendment to 2011 taxes   Market discount arises when a debt instrument purchased in the secondary market has decreased in value since its issue date, generally because of an increase in interest rates. How to file an amendment to 2011 taxes An OID debt instrument has market discount if your adjusted basis in the debt instrument immediately after you acquired it (usually its purchase price) was less than the debt instrument's issue price plus the total OID that accrued before you acquired it. How to file an amendment to 2011 taxes The market discount is the difference between the issue price plus accrued OID and your adjusted basis. How to file an amendment to 2011 taxes Premium. How to file an amendment to 2011 taxes   A debt instrument is purchased at a premium if its adjusted basis immediately after purchase is greater than the total of all amounts payable on the debt instrument after the purchase date, other than qualified stated interest. How to file an amendment to 2011 taxes The premium is the excess of the adjusted basis over the payable amounts. How to file an amendment to 2011 taxes See Publication 550 for information on the tax treatment of bond premium. How to file an amendment to 2011 taxes Qualified stated interest. How to file an amendment to 2011 taxes   In general, qualified stated interest is stated interest that is unconditionally 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 rate. How to file an amendment to 2011 taxes Stated redemption price at maturity. How to file an amendment to 2011 taxes   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 interest. How to file an amendment to 2011 taxes Yield to maturity (YTM). How to file an amendment to 2011 taxes   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 issue price of the debt instrument. How to file an amendment to 2011 taxes The YTM is generally shown on the face of the debt instrument or in the literature you receive from your broker. How to file an amendment to 2011 taxes If you do not have this information, consult your broker, tax advisor, or the issuer. How to file an amendment to 2011 taxes Debt Instruments on the OID List The OID list on the IRS website can be used by brokers and other middlemen to prepare information returns. How to file an amendment to 2011 taxes If you own a listed debt instrument, you generally should not rely on the information in the OID list to determine (or compare) the OID to be reported on your tax return. How to file an amendment to 2011 taxes The OID amounts listed are figured without reference to the price or date at which you acquired the debt instrument. How to file an amendment to 2011 taxes For information about determining the OID to be reported on your tax return, see the instructions for figuring OID under Information for Owners of OID Debt Instruments, later. How to file an amendment to 2011 taxes The following discussions explain what information is contained in each section of the list. How to file an amendment to 2011 taxes Section I. How to file an amendment to 2011 taxes   This section contains publicly offered, long-term debt instruments. How to file an amendment to 2011 taxes Section I-A: Corporate Debt Instruments Issued Before 1985. How to file an amendment to 2011 taxes Section I-B: Corporate Debt Instruments Issued After 1984. How to file an amendment to 2011 taxes Section I-C: Inflation-Indexed Debt Instruments. How to file an amendment to 2011 taxes For each publicly offered debt instrument in Section I, the list contains the following information. How to file an amendment to 2011 taxes The name of the issuer. How to file an amendment to 2011 taxes The Committee on Uniform Security Identification Procedures (CUSIP) number. How to file an amendment to 2011 taxes The issue date. How to file an amendment to 2011 taxes The maturity date. How to file an amendment to 2011 taxes The issue price expressed as a percent of principal or of stated redemption price at maturity. How to file an amendment to 2011 taxes The annual stated or coupon interest rate. How to file an amendment to 2011 taxes (This rate is shown as 0. How to file an amendment to 2011 taxes 00 if no annual interest payments are provided. How to file an amendment to 2011 taxes ) The yield to maturity will be added to Section I-B for bonds issued after December 31, 2006. How to file an amendment to 2011 taxes The total OID accrued up to January 1 of a calendar year. How to file an amendment to 2011 taxes (This information is not available for every instrument. How to file an amendment to 2011 taxes ) For long-term debt instruments issued after July 1, 1982, the daily OID for the accrual periods falling in a calendar year and a subsequent year. How to file an amendment to 2011 taxes The total OID per $1,000 of principal or maturity value for a calendar year and a subsequent year. How to file an amendment to 2011 taxes Section II. How to file an amendment to 2011 taxes   This section contains stripped coupons and principal components of U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes Treasury and Government-Sponsored Enterprise debt instruments. How to file an amendment to 2011 taxes These stripped components are available through the Department of the Treasury's Separate Trading of Registered Interest and Principal of Securities (STRIPS) program and government-sponsored enterprises such as the Resolution Funding Corporation. How to file an amendment to 2011 taxes This section also includes debt instruments backed by U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes Treasury securities that represent ownership interests in those securities. How to file an amendment to 2011 taxes   The obligations listed in Section II are arranged by maturity date. How to file an amendment to 2011 taxes The amounts listed are the total OID for a calendar year per $1,000 of redemption price. How to file an amendment to 2011 taxes Section III. How to file an amendment to 2011 taxes   This section contains short-term discount obligations. How to file an amendment to 2011 taxes Section III-A: Short-Term U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes Treasury Bills. How to file an amendment to 2011 taxes Section III-B: Federal Home Loan Banks. How to file an amendment to 2011 taxes Section III-C: Federal National Mortgage Association. How to file an amendment to 2011 taxes Section III-D: Federal Farm Credit Banks. How to file an amendment to 2011 taxes Section III-E: Federal Home Loan Mortgage Corporation. How to file an amendment to 2011 taxes Section III-F: Federal Agricultural Mortgage Corporation. How to file an amendment to 2011 taxes    Information that supplements Section III-A is available on the Internet at http://www. How to file an amendment to 2011 taxes treasurydirect. How to file an amendment to 2011 taxes gov/tdhome. How to file an amendment to 2011 taxes htm. How to file an amendment to 2011 taxes   The short-term obligations listed in this section are arranged by maturity date. How to file an amendment to 2011 taxes For each obligation, the list contains the CUSIP number, maturity date, issue date, issue price (expressed as a percent of principal), and discount to be reported as interest for a calendar year per $1,000 of redemption price. How to file an amendment to 2011 taxes Brokers and other middlemen should rely on the issue price information in Section III only if they are unable to determine the price actually paid by the owner. How to file an amendment to 2011 taxes Debt Instruments Not on the OID List The list of debt instruments discussed earlier does not contain the following items. How to file an amendment to 2011 taxes U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes savings bonds. How to file an amendment to 2011 taxes Certificates of deposit and other face-amount certificates issued at a discount, including syndicated certificates of deposit. How to file an amendment to 2011 taxes Obligations issued by tax-exempt organizations. How to file an amendment to 2011 taxes OID debt instruments that matured or were entirely called by the issuer before the tables were posted on the IRS website. How to file an amendment to 2011 taxes Mortgage-backed securities and mortgage participation certificates. How to file an amendment to 2011 taxes Long-term OID debt instruments issued before May 28, 1969. How to file an amendment to 2011 taxes Short-term obligations, other than the obligations listed in Section III. How to file an amendment to 2011 taxes Debt instruments issued at a discount by states or their political subdivisions. How to file an amendment to 2011 taxes REMIC regular interests and CDOs. How to file an amendment to 2011 taxes Commercial paper and banker's acceptances issued at a discount. How to file an amendment to 2011 taxes Obligations issued at a discount by individuals. How to file an amendment to 2011 taxes Foreign obligations not traded in the United States and obligations not issued in the United States. How to file an amendment to 2011 taxes Information for Brokers and Other Middlemen The following discussions contain specific instructions for brokers and middlemen who hold or redeem a debt instrument for the owner. How to file an amendment to 2011 taxes In general, you must file a Form 1099 for the debt instrument if the interest or OID to be included in the owner's income for a calendar year totals $10 or more. How to file an amendment to 2011 taxes You also must file a Form 1099 if you were required to deduct and withhold tax, even if the interest or OID is less than $10. How to file an amendment to 2011 taxes See Backup Withholding, later. How to file an amendment to 2011 taxes If you must file a Form 1099, furnish a copy to the owner of the debt instrument by January 31 in the year it is due. How to file an amendment to 2011 taxes File all your Forms 1099 with the IRS, accompanied by Form 1096, by February 28 in the year it is due (March 31 if you file electronically). How to file an amendment to 2011 taxes Electronic payee statements. How to file an amendment to 2011 taxes   You can issue Form 1099-OID electronically with the consent of the recipient. How to file an amendment to 2011 taxes More information. How to file an amendment to 2011 taxes   For more information, including penalties for failure to file (or furnish) required information returns or statements, see the General Instructions for Certain Information Returns (Forms 1098, 1099, 3921, 3922, 5498, and W-2G) for the appropriate calendar year. How to file an amendment to 2011 taxes Short-Term Obligations Redeemed at Maturity If you redeem a short-term discount obligation for the owner at maturity, you must report the discount as interest on Form 1099-INT. How to file an amendment to 2011 taxes To figure the discount, use the purchase price shown on the owner's copy of the purchase confirmation receipt or similar record, or the price shown in your transaction records. How to file an amendment to 2011 taxes If you sell the obligation for the owner before maturity, you must file Form 1099-B to reflect the gross proceeds to the seller. How to file an amendment to 2011 taxes Do not report the accrued discount to the date of sale on either Form 1099-INT or Form 1099-OID. How to file an amendment to 2011 taxes If the owner's purchase price cannot be determined, figure the discount as if the owner had purchased the obligation at its original issue price. How to file an amendment to 2011 taxes A special rule is used to determine the original issue price for information reporting on U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes Treasury bills (T-bills) listed in Section III-A. How to file an amendment to 2011 taxes Under this rule, you treat as the original issue price of the T-bill the noncompetitive (weighted average of accepted auction bids) discount price for the longest-maturity T-bill maturing on the same date as the T-bill being redeemed. How to file an amendment to 2011 taxes This noncompetitive discount price is the issue price (expressed as a percent of principal) shown in Section III-A. How to file an amendment to 2011 taxes A similar rule is used to figure the discount on short-term discount obligations issued by the organizations listed in Section III-B through Section III-F. How to file an amendment to 2011 taxes Example 1. How to file an amendment to 2011 taxes There are 13-week and 26-week T-bills maturing on the same date as the T-bill being redeemed. How to file an amendment to 2011 taxes The price actually paid by the owner cannot be established by owner or middleman records. How to file an amendment to 2011 taxes You treat as the issue price of the T-bill the noncompetitive discount price (expressed as a percent of principal) shown in Section III-A for a 26-week bill maturing on the same date as the T-bill redeemed. How to file an amendment to 2011 taxes The interest you report on Form 1099-INT is the OID (per $1,000 of principal) shown in Section III-A for that obligation. How to file an amendment to 2011 taxes Long-Term Debt Instruments If you hold a long-term OID debt instrument as a nominee for the true owner, you generally must file Form 1099-OID. How to file an amendment to 2011 taxes For this purpose, you can rely on Section I of the OID list to determine the following information. How to file an amendment to 2011 taxes Whether a debt instrument has OID. How to file an amendment to 2011 taxes The OID to be reported on the Form 1099-OID. How to file an amendment to 2011 taxes In general, you must report OID on publicly offered, long-term debt instruments listed in Section I. How to file an amendment to 2011 taxes You also can report OID on other long-term debt instruments. How to file an amendment to 2011 taxes Form 1099-OID. How to file an amendment to 2011 taxes   On Form 1099-OID for a calendar year show the following information. How to file an amendment to 2011 taxes Box 1. How to file an amendment to 2011 taxes The OID for the actual dates the owner held the debt instruments during a calendar year. How to file an amendment to 2011 taxes To determine this amount, see Figuring OID, next. How to file an amendment to 2011 taxes Box 2. How to file an amendment to 2011 taxes The qualified stated interest paid or credited during the calendar year. How to file an amendment to 2011 taxes Interest reported here is not reported on Form 1099-INT. How to file an amendment to 2011 taxes The qualified stated interest on Treasury inflation-protected securities may be reported on Form 1099-INT in box 3 instead. How to file an amendment to 2011 taxes Box 3. How to file an amendment to 2011 taxes Any interest or principal forfeited because of an early withdrawal that the owner can deduct from gross income. How to file an amendment to 2011 taxes Do not reduce the amounts in boxes 1 and 2 by the forfeiture. How to file an amendment to 2011 taxes Box 4. How to file an amendment to 2011 taxes Any backup withholding for this debt instrument. How to file an amendment to 2011 taxes Box 7. How to file an amendment to 2011 taxes The CUSIP number, if any. How to file an amendment to 2011 taxes If there is no CUSIP number, give a description of the debt instrument, including the abbreviation for the stock exchange, the abbreviation used by the stock exchange for the issuer, the coupon rate, and the year of maturity (for example, NYSE XYZ 12. How to file an amendment to 2011 taxes 50 2006). How to file an amendment to 2011 taxes If the issuer of the debt instrument is other than the payer, show the name of the issuer in this box. How to file an amendment to 2011 taxes Box 8. How to file an amendment to 2011 taxes The OID on a U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes Treasury obligation for the part of the year the owner held the debt instrument. How to file an amendment to 2011 taxes Box 9. How to file an amendment to 2011 taxes Investment expenses passed on to holders of a single-class REMIC. How to file an amendment to 2011 taxes Boxes 10-12. How to file an amendment to 2011 taxes Use to report any state income tax withheld for this debt instrument. How to file an amendment to 2011 taxes Figuring OID. How to file an amendment to 2011 taxes   You can determine the OID on a long-term debt instrument by using either of the following. How to file an amendment to 2011 taxes Section I of the OID list. How to file an amendment to 2011 taxes The income tax regulations. How to file an amendment to 2011 taxes Using Section I. How to file an amendment to 2011 taxes   If the owner held the debt instrument for the entire calendar year, report the OID shown in Section I for the calendar year. How to file an amendment to 2011 taxes Because OID is listed for each $1,000 of stated redemption price at maturity, you must adjust the listed amount to reflect the debt instrument's actual stated redemption price at maturity. How to file an amendment to 2011 taxes For example, if the debt instrument's stated redemption price at maturity is $500, report one-half the listed OID. How to file an amendment to 2011 taxes   If the owner held the debt instrument for less than the entire calendar year, figure the OID to report as follows. How to file an amendment to 2011 taxes Look up the daily OID for the first accrual period in the calendar year during which the owner held the debt instrument. How to file an amendment to 2011 taxes Multiply the daily OID by the number of days the owner held the debt instrument during that accrual period. How to file an amendment to 2011 taxes Repeat steps (1) and (2) for any remaining accrual periods for the year during which the owner held the debt instrument. How to file an amendment to 2011 taxes Add the results in steps (2) and (3) to determine the owner's OID per $1,000 of stated redemption price at maturity. How to file an amendment to 2011 taxes If necessary, adjust the OID in (4) to reflect the debt instrument's stated redemption price at maturity. How to file an amendment to 2011 taxes Report the result on Form 1099-OID in box 1. How to file an amendment to 2011 taxes Using the income tax regulations. How to file an amendment to 2011 taxes   Instead of using Section I to figure OID, you can use the regulations under sections 1272 through 1275 of the Internal Revenue Code. How to file an amendment to 2011 taxes For example, under the regulations, you can use monthly accrual periods in figuring OID for a debt instrument issued after April 3, 1994, that provides for monthly payments. How to file an amendment to 2011 taxes (If you use Section I-B, the OID is figured using 6-month accrual periods. How to file an amendment to 2011 taxes )   For a general explanation of the rules for figuring OID under the regulations, see Figuring OID on Long-Term Debt Instruments under Information for Owners of OID Debt Instruments, later. How to file an amendment to 2011 taxes Certificates of Deposit If you hold a bank certificate of deposit (CD) as a nominee, you must determine whether the CD has OID and any OID includible in the income of the owner. How to file an amendment to 2011 taxes You must file an information return showing the reportable interest and OID, if any, on the CD. How to file an amendment to 2011 taxes These rules apply whether or not you sold the CD to the owner. How to file an amendment to 2011 taxes Report OID on a CD in the same way as OID on other debt instruments. How to file an amendment to 2011 taxes See Short-Term Obligations Redeemed at Maturity and Long-Term Debt Instruments, earlier. How to file an amendment to 2011 taxes Bearer Bonds and Coupons If a coupon from a bearer bond is presented to you for collection before the bond matures, you generally must report the interest on Form 1099-INT. How to file an amendment to 2011 taxes However, do not report the interest if either of the following apply. How to file an amendment to 2011 taxes You hold the bond as a nominee for the true owner. How to file an amendment to 2011 taxes The payee is a foreign person. How to file an amendment to 2011 taxes See Payments to foreign person under Backup Withholding, later. How to file an amendment to 2011 taxes Because you cannot assume the presenter of the coupon also owns the bond, you should not report OID on the bond on Form 1099-OID. How to file an amendment to 2011 taxes The coupon may have been “stripped” (separated) from the bond and separately purchased. How to file an amendment to 2011 taxes However, if a long-term bearer bond on the OID list is presented to you for redemption upon call or maturity, you should prepare a Form 1099-OID showing the OID for that calendar year, as well as any coupon interest payments collected at the time of redemption. How to file an amendment to 2011 taxes Backup Withholding If you report OID on Form 1099-OID or interest on Form 1099-INT for a calendar year, you may be required to apply backup withholding to the reportable payment at a rate of 28%. How to file an amendment to 2011 taxes The backup withholding is deducted at the time a cash payment is made. How to file an amendment to 2011 taxes See Pub. How to file an amendment to 2011 taxes 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), for more information. How to file an amendment to 2011 taxes Backup withholding generally applies in the following situations. How to file an amendment to 2011 taxes The payee does not give you a taxpayer identification number (TIN). How to file an amendment to 2011 taxes The IRS notifies you that the payee gave an incorrect TIN. How to file an amendment to 2011 taxes The IRS notifies you that the payee is subject to backup withholding due to payee underreporting. How to file an amendment to 2011 taxes For debt instruments acquired after 1983: The payee does not certify, under penalties of perjury, that he or she is not subject to backup withholding under (3), or The payee does not certify, under penalties of perjury, that the TIN given is correct. How to file an amendment to 2011 taxes However, for short-term discount obligations (other than government obligations), bearer bonds and coupons, and U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes savings bonds, backup withholding applies only if the payee does not give you a TIN or gives you an obviously incorrect number for a TIN. How to file an amendment to 2011 taxes Short-term obligations. How to file an amendment to 2011 taxes   Backup withholding applies to OID on a short-term obligation only when the OID is paid at maturity. How to file an amendment to 2011 taxes However, backup withholding applies to any interest payable before maturity when the interest is paid or credited. How to file an amendment to 2011 taxes   If the owner of a short-term obligation at maturity is not the original owner and can establish the purchase price of the obligation, the amount subject to backup withholding must be determined by treating the purchase price as the issue price. How to file an amendment to 2011 taxes However, you can choose to disregard that price if it would require significant manual intervention in the computer or recordkeeping system used for the obligation. How to file an amendment to 2011 taxes If the purchase price of a listed obligation is not established or is disregarded, you must use the issue price shown in Section III. How to file an amendment to 2011 taxes Long-term obligations. How to file an amendment to 2011 taxes   If no cash payments are made on a long-term obligation before maturity, backup withholding applies only at maturity. How to file an amendment to 2011 taxes The amount subject to backup withholding is the OID includible in the owner's gross income for the calendar year when the obligation matures. How to file an amendment to 2011 taxes The amount to be withheld is limited to the cash paid. How to file an amendment to 2011 taxes Registered long-term obligations with cash payments. How to file an amendment to 2011 taxes   If a registered long-term obligation has cash payments before maturity, backup withholding applies when a cash payment is made. How to file an amendment to 2011 taxes The amount subject to backup withholding is the total of the qualified stated interest (defined earlier under Definitions) and OID includible in the owner's gross income for the calendar year when the payment is made. How to file an amendment to 2011 taxes If more than one cash payment is made during the year, the OID subject to withholding for the year must be allocated among the expected cash payments in the ratio that each bears to the total of the expected cash payments. How to file an amendment to 2011 taxes For any payment, the required withholding is limited to the cash paid. How to file an amendment to 2011 taxes Payee not the original owner. How to file an amendment to 2011 taxes   If the payee is not the original owner of the obligation, the OID subject to backup withholding is the OID includible in the gross income of all owners during the calendar year (without regard to any amount paid by the new owner at the time of transfer). How to file an amendment to 2011 taxes The amount subject to backup withholding at maturity of a listed obligation must be determined using the issue price shown in Section I. How to file an amendment to 2011 taxes Bearer long-term obligations with cash payments. How to file an amendment to 2011 taxes   If a bearer long-term obligation has cash payments before maturity, backup withholding applies when the cash payments are made. How to file an amendment to 2011 taxes For payments before maturity, the amount subject to withholding is the qualified stated interest (defined earlier under Definitions) includible in the owner's gross income for the calendar year. How to file an amendment to 2011 taxes For a payment at maturity, the amount subject to withholding is only the total of any qualified stated interest paid at maturity and the OID includible in the owner's gross income for the calendar year when the obligation matures. How to file an amendment to 2011 taxes The required withholding at maturity is limited to the cash paid. How to file an amendment to 2011 taxes Sales and redemptions. How to file an amendment to 2011 taxes   If you report the gross proceeds from a sale, exchange, or redemption of a debt instrument on Form 1099-B for a calendar year, you may be required to withhold 28% of the amount reported. How to file an amendment to 2011 taxes Backup withholding applies in the following situations. How to file an amendment to 2011 taxes The payee does not give you a TIN. How to file an amendment to 2011 taxes The IRS notifies you that the payee gave an incorrect TIN. How to file an amendment to 2011 taxes For debt instruments held in an account opened after 1983, the payee does not certify, under penalties of perjury, that the TIN given is correct. How to file an amendment to 2011 taxes Payments outside the United States to U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes person. How to file an amendment to 2011 taxes   The requirements for backup withholding and information reporting apply to payments of OID and interest made outside the United States to a U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes person, a controlled foreign corporation, or a foreign person at least 50% of whose income for the preceding 3-year period is effectively connected with the conduct of a U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes trade or business. How to file an amendment to 2011 taxes Payments to foreign person. How to file an amendment to 2011 taxes   The following discussions explain the rules for backup withholding and information reporting on payments to foreign persons. How to file an amendment to 2011 taxes U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes -source amount. How to file an amendment to 2011 taxes   Backup withholding and information reporting are not required for payments of U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes -source OID, interest, or proceeds from a sale or redemption of an OID instrument if the payee has given you proof (generally the appropriate Form W-8 or an acceptable substitute) that the payee is a foreign person. How to file an amendment to 2011 taxes A U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes resident is not a foreign person. How to file an amendment to 2011 taxes For proof of the payee's foreign status, you can rely on the appropriate Form W-8 or on documentary evidence for payments made outside the United States to an offshore account or, in case of broker proceeds, a sale effected outside the United States. How to file an amendment to 2011 taxes Receipt of the appropriate Form W-8 does not relieve you from information reporting and backup withholding if you actually know the payee is a U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes person. How to file an amendment to 2011 taxes   For information about the 28% withholding tax that may apply to payments of U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes -source OID or interest to foreign persons, see Publication 515. How to file an amendment to 2011 taxes Foreign-source amount. How to file an amendment to 2011 taxes   Backup withholding and information reporting are not required for payments of foreign-source OID and interest made outside the United States. How to file an amendment to 2011 taxes However, if the payments are made inside the United States, the requirements for backup withholding and information reporting will apply unless the payee has given you the appropriate Form W-8 or acceptable substitute as proof that the payee is a foreign person. How to file an amendment to 2011 taxes More information. How to file an amendment to 2011 taxes   For more information about backup withholding and information reporting on foreign-source amounts or payments to foreign persons, see Regulations section 1. How to file an amendment to 2011 taxes 6049-5. How to file an amendment to 2011 taxes Information for Owners of OID Debt Instruments This section is for persons who prepare their own tax returns. How to file an amendment to 2011 taxes It discusses the income tax rules for figuring and reporting OID on long-term debt instruments. How to file an amendment to 2011 taxes It also includes a similar discussion for stripped bonds and coupons, such as zero coupon bonds available through the Department of the Treasury's STRIPS program and government-sponsored enterprises such as the Resolution Funding Corporation. How to file an amendment to 2011 taxes However, the information provided does not cover every situation. How to file an amendment to 2011 taxes More information can be found in the regulations under sections 1271 through 1275 of the Internal Revenue Code. How to file an amendment to 2011 taxes Including OID in income. How to file an amendment to 2011 taxes   Generally, you include OID in income as it accrues each year, whether or not you receive any payments from the debt instrument issuer. How to file an amendment to 2011 taxes Exceptions. How to file an amendment to 2011 taxes   The rules for including OID in income as it accrues generally do not apply to the following debt instruments. How to file an amendment to 2011 taxes U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes savings bonds. How to file an amendment to 2011 taxes Tax-exempt obligations. How to file an amendment to 2011 taxes (However, see Tax-Exempt Bonds and Coupons, later. How to file an amendment to 2011 taxes ) Obligations issued by individuals before March 2, 1984. How to file an amendment to 2011 taxes Loans of $10,000 or less between individuals who are not in the business of lending money. How to file an amendment to 2011 taxes (The dollar limit includes outstanding prior loans by the lender to the borrower. How to file an amendment to 2011 taxes ) This exception does not apply if a principal purpose of the loan is to avoid any federal tax. How to file an amendment to 2011 taxes   See chapter 1 of Publication 550 for information about the rules for these and other types of discounted debt instruments, such as short-term and market discount obligations. How to file an amendment to 2011 taxes Publication 550 also discusses rules for holders of REMIC interests and CDOs. How to file an amendment to 2011 taxes De minimis rule. How to file an amendment to 2011 taxes   You can treat OID as zero if the total OID on a debt instrument is less than one-fourth of 1% (. How to file an amendment to 2011 taxes 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. How to file an amendment to 2011 taxes Debt instruments with de minimis OID are not listed in this publication. How to file an amendment to 2011 taxes There are special rules to determine the de minimis amount in the case of debt instruments that provide for more than one payment of principal. How to file an amendment to 2011 taxes Also, the de minimis rules generally do not apply to tax-exempt obligations. How to file an amendment to 2011 taxes Example 2. How to file an amendment to 2011 taxes You bought at issuance a 10-year debt instrument with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. How to file an amendment to 2011 taxes One-fourth of 1% of $1,000 (the stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. How to file an amendment to 2011 taxes Under the de minimis rule, you can treat the OID as zero because the $20 discount is less than $25. How to file an amendment to 2011 taxes Example 3. How to file an amendment to 2011 taxes Assume the same facts as Example 2, except the debt instrument was issued at $950. How to file an amendment to 2011 taxes You must report part of the $50 OID each year because it is more than $25. How to file an amendment to 2011 taxes Choice to report all interest as OID. How to file an amendment to 2011 taxes   Generally, you can choose to treat all interest on a debt instrument acquired after April 3, 1994, as OID and include it in gross income by using the constant yield method. How to file an amendment to 2011 taxes See Constant yield method under Debt Instruments Issued After 1984, later, for more information. How to file an amendment to 2011 taxes   For this choice, interest includes stated interest, acquisition discount, OID, de minimis OID, market discount, de minimis market discount, and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. How to file an amendment to 2011 taxes For more information, see Regulations section 1. How to file an amendment to 2011 taxes 1272-3. How to file an amendment to 2011 taxes Purchase after date of original issue. How to file an amendment to 2011 taxes   A debt instrument you purchased after the date of original issue may have premium, acquisition premium, or market discount. How to file an amendment to 2011 taxes If so, the OID reported to you on Form 1099-OID may have to be adjusted. How to file an amendment to 2011 taxes For more information, see Showing an OID adjustment under How To Report OID, later. How to file an amendment to 2011 taxes The following rules generally do not apply to contingent payment debt instruments. How to file an amendment to 2011 taxes Adjustment for premium. How to file an amendment to 2011 taxes   If your debt instrument (other than an inflation-indexed debt instrument) has premium, do not report any OID as ordinary income. How to file an amendment to 2011 taxes Your adjustment is the total OID shown on your Form 1099-OID. How to file an amendment to 2011 taxes Adjustment for acquisition premium. How to file an amendment to 2011 taxes   If your debt instrument has acquisition premium, reduce the OID you report. How to file an amendment to 2011 taxes Your adjustment is the difference between the OID shown on your Form 1099-OID and the reduced OID amount figured using the rules explained later under Figuring OID on Long-Term Debt Instruments. How to file an amendment to 2011 taxes Adjustment for market discount. How to file an amendment to 2011 taxes   If your debt instrument has market discount that you choose to include in income currently, increase the OID you report. How to file an amendment to 2011 taxes Your adjustment is the accrued market discount for the year. How to file an amendment to 2011 taxes See Market Discount Bonds in chapter 1 of Publication 550 for information on how to figure accrued market discount and include it in your income currently and for other information about market discount bonds. How to file an amendment to 2011 taxes If you choose to use the constant yield method to figure accrued market discount, also see Figuring OID on Long-Term Debt Instruments, later. How to file an amendment to 2011 taxes The constant yield method of figuring accrued OID, explained in those discussions under Constant yield method, is also used to figure accrued market discount. How to file an amendment to 2011 taxes For more information concerning premium or market discount on an inflation-indexed debt instrument, see Regulations section 1. How to file an amendment to 2011 taxes 1275-7. How to file an amendment to 2011 taxes Sale, exchange, or redemption. How to file an amendment to 2011 taxes   Generally, you treat your gain or loss from the sale, exchange, or redemption of a discounted debt instrument as a capital gain or loss if you held the debt instrument as a capital asset. How to file an amendment to 2011 taxes If you sold the debt instrument through a broker, you should receive Form 1099-B or an equivalent statement from the broker. How to file an amendment to 2011 taxes Use the Form 1099-B or other statement and your brokerage statements to complete Form 8949, and Schedule D (Form 1040). How to file an amendment to 2011 taxes   Your gain or loss is the difference between the amount you realized on the sale, exchange, or redemption and your basis in the debt instrument. How to file an amendment to 2011 taxes Your basis, generally, is your cost increased by the OID you have included in income each year you held it. How to file an amendment to 2011 taxes In general, to determine your gain or loss on a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. How to file an amendment to 2011 taxes   See chapter 4 of Publication 550 for more information about the tax treatment of the sale or redemption of discounted debt instruments. How to file an amendment to 2011 taxes Example 4. How to file an amendment to 2011 taxes Larry, a calendar year taxpayer, bought a corporate debt instrument at original issue for $86,235. How to file an amendment to 2011 taxes 00 on November 1 of Year 1. How to file an amendment to 2011 taxes The 15-year debt instrument matures on October 31 of Year 16 at a stated redemption price of $100,000. How to file an amendment to 2011 taxes The debt instrument provides for semiannual payments of interest at 10%. How to file an amendment to 2011 taxes Assume the debt instrument is a capital asset in Larry's hands. How to file an amendment to 2011 taxes The debt instrument has $13,765. How to file an amendment to 2011 taxes 00 of OID ($100,000 stated redemption price at maturity minus $86,235. How to file an amendment to 2011 taxes 00 issue price). How to file an amendment to 2011 taxes Larry sold the debt instrument for $90,000 on November 1 of Year 4. How to file an amendment to 2011 taxes Including the OID he will report for the period he held the debt instrument in Year 4, Larry has included $4,556. How to file an amendment to 2011 taxes 00 of OID in income and has increased his basis by that amount to $90,791. How to file an amendment to 2011 taxes 00. How to file an amendment to 2011 taxes Larry has realized a loss of $791. How to file an amendment to 2011 taxes 00. How to file an amendment to 2011 taxes All of Larry's loss is capital loss. How to file an amendment to 2011 taxes Form 1099-OID The issuer of the debt instrument (or your broker, if you purchased or held the debt instrument through a broker) should give you a copy of Form 1099-OID or a similar statement if the accrued OID for the calendar year is $10 or more and the term of the debt instrument is more than 1 year. How to file an amendment to 2011 taxes Form 1099-OID shows all OID income in box 1 except OID on a U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes Treasury obligation, which is shown in box 8. How to file an amendment to 2011 taxes It also shows, in box 2, any qualified stated interest you must include in income. How to file an amendment to 2011 taxes (However, any qualified stated interest on Treasury inflation-protected securities can be reported on Form 1099-INT in box 3. How to file an amendment to 2011 taxes ) A copy of Form 1099-OID will be sent to the IRS. How to file an amendment to 2011 taxes Do not attach your copy to your tax return. How to file an amendment to 2011 taxes Keep it for your records. How to file an amendment to 2011 taxes If you are required to file a tax return and you receive Form 1099-OID showing taxable amounts, you must report these amounts on your return. How to file an amendment to 2011 taxes A 20% accuracy-related penalty may be charged for underpayment of tax due to either negligence or disregard of rules and regulations or substantial understatement of tax. How to file an amendment to 2011 taxes Form 1099-OID not received. How to file an amendment to 2011 taxes   If you held an OID debt instrument for a calendar year but did not receive a Form 1099-OID, refer to the discussions under Figuring OID on Long-Term Debt Instruments, later, for information on the OID you must report. How to file an amendment to 2011 taxes Refiguring OID. How to file an amendment to 2011 taxes   You must refigure the OID shown on Form 1099-OID, in box 1 or box 8, to determine the proper amount to include in income if one of the following applies. How to file an amendment to 2011 taxes You bought the debt instrument at a premium or at an acquisition premium. How to file an amendment to 2011 taxes The debt instrument is a stripped bond or coupon (including zero coupon bonds backed by U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes Treasury securities). How to file an amendment to 2011 taxes The debt instrument is a contingent payment or inflation-indexed debt instrument. How to file an amendment to 2011 taxes See the discussions under Figuring OID on Long-Term Debt Instruments or Figuring OID on Stripped Bonds and Coupons, later, for the specific computations. How to file an amendment to 2011 taxes Refiguring interest. How to file an amendment to 2011 taxes   If you disposed of a debt instrument or acquired it from another holder between interest dates, see the discussion under Bonds Sold Between Interest Dates in chapter 1 of Publication 550 for information about refiguring the interest shown on Form 1099-OID in box 2. How to file an amendment to 2011 taxes Nominee. How to file an amendment to 2011 taxes   If you are the holder of an OID debt instrument and you receive a Form 1099-OID that shows your taxpayer identification number and includes amounts belonging to another person, you are considered a “nominee. How to file an amendment to 2011 taxes ” You must file another Form 1099-OID for each actual owner, showing the OID for the owner. How to file an amendment to 2011 taxes Show the owner of the debt instrument as the “recipient” and you as the “payer. How to file an amendment to 2011 taxes ”   Complete Form 1099-OID and Form 1096 and file the forms with the Internal Revenue Service Center for your area. How to file an amendment to 2011 taxes You must also give a copy of the Form 1099-OID to the actual owner. How to file an amendment to 2011 taxes However, you are not required to file a nominee return to show amounts belonging to your spouse. How to file an amendment to 2011 taxes See the Form 1099 instructions for more information. How to file an amendment to 2011 taxes   When preparing your tax return, follow the instructions under Showing an OID adjustment in the next discussion. How to file an amendment to 2011 taxes How To Report OID Generally, you report your taxable interest and OID income on the interest line of Form 1040EZ, Form 1040A, or Form 1040. How to file an amendment to 2011 taxes Form 1040 or Form 1040A required. How to file an amendment to 2011 taxes   You must use Form 1040 or Form 1040A (you cannot use Form 1040EZ) under either of the following conditions. How to file an amendment to 2011 taxes You received a Form 1099-OID as a nominee for the actual owner. How to file an amendment to 2011 taxes Your total interest and OID income for the year was more than $1,500. How to file an amendment to 2011 taxes Form 1040 required. How to file an amendment to 2011 taxes   You must use Form 1040 (you cannot use Form 1040A or Form 1040EZ) if you are reporting more or less OID than the amount shown on Form 1099-OID, other than because you are a nominee. How to file an amendment to 2011 taxes For example, if you paid a premium or an acquisition premium when you purchased the debt instrument, you must use Form 1040 because you will report less OID than shown on Form 1099-OID. How to file an amendment to 2011 taxes Also, you must use Form 1040 if you were charged an early withdrawal penalty. How to file an amendment to 2011 taxes Where to report. How to file an amendment to 2011 taxes   List each payer's name (if a brokerage firm gave you a Form 1099, list the brokerage firm as the payer) and the amount received from each payer on Form 1040A, Schedule B, Part I, line 1, or Form 1040, Schedule B, line 1. How to file an amendment to 2011 taxes Include all OID and periodic interest shown on any Form 1099-OID, boxes 1, 2, and 8, you received for the tax year. How to file an amendment to 2011 taxes Also include any other OID and interest income for which you did not receive a Form 1099. How to file an amendment to 2011 taxes Showing an OID adjustment. How to file an amendment to 2011 taxes   If you use Form 1040 to report more or less OID than shown on Form 1099-OID, list the full OID on Schedule B, Part I, line 1, and follow the instructions under 1 or 2, next. How to file an amendment to 2011 taxes   If you use Form 1040A to report the OID shown on a Form 1099-OID you received as a nominee for the actual owner, list the full OID on Schedule B, Part I, line 1 and follow the instructions under 1. How to file an amendment to 2011 taxes If the OID, as adjusted, is less than the amount shown on Form 1099-OID, show the adjustment as follows. How to file an amendment to 2011 taxes Under your last entry on line 1, subtotal all interest and OID income listed on line 1. How to file an amendment to 2011 taxes Below the subtotal, write “Nominee Distribution” or “OID Adjustment” and show the OID you are not required to report. How to file an amendment to 2011 taxes Subtract that OID from the subtotal and enter the result on line 2. How to file an amendment to 2011 taxes If the OID, as adjusted, is more than the amount shown on Form 1099-OID, show the adjustment as follows. How to file an amendment to 2011 taxes Under your last entry on line 1, subtotal all interest and OID income listed on line 1. How to file an amendment to 2011 taxes Below the subtotal, write “OID Adjustment” and show the additional OID. How to file an amendment to 2011 taxes Add that OID to the subtotal and enter the result on line 2. How to file an amendment to 2011 taxes Figuring OID on Long-Term Debt Instruments How you figure the OID on a long-term debt instrument depends on the date it was issued. How to file an amendment to 2011 taxes It also may depend on the type of the debt instrument. How to file an amendment to 2011 taxes There are different rules for each of the following debt instruments. How to file an amendment to 2011 taxes Corporate debt instruments issued after 1954 and before May 28, 1969, and government debt instruments issued after 1954 and before July 2, 1982. How to file an amendment to 2011 taxes Corporate debt instruments issued after May 27, 1969, and before July 2, 1982. How to file an amendment to 2011 taxes Debt instruments issued after July 1, 1982, and before 1985. How to file an amendment to 2011 taxes Debt instruments issued after 1984 (other than debt instruments described in (5) and (6)). How to file an amendment to 2011 taxes Contingent payment debt instruments issued after August 12, 1996. How to file an amendment to 2011 taxes Inflation-indexed debt instruments (including Treasury inflation-protected securities) issued after January 5, 1997. How to file an amendment to 2011 taxes Zero coupon bonds. How to file an amendment to 2011 taxes   The rules for figuring OID on zero coupon bonds backed by U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes Treasury securities are discussed under Figuring OID on Stripped Bonds and Coupons, later. How to file an amendment to 2011 taxes Corporate Debt Instruments Issued After 1954 and Before May 28, 1969, and Government Debt Instruments Issued After 1954 and Before July 2, 1982 If you hold these debt instruments as capital assets, you include OID in income only in the year the debt instrument is sold, exchanged, or redeemed, and only if you have a gain. How to file an amendment to 2011 taxes The OID, which is taxed as ordinary income, generally equals the following amount. How to file an amendment to 2011 taxes   number of full months you held the debt instrument  number of full months from date of original issue to date of maturity X original issue discount The balance of the gain is capital gain. How to file an amendment to 2011 taxes If there is a loss on the sale of the debt instrument, the entire loss is a capital loss and no OID is reported. How to file an amendment to 2011 taxes Corporate Debt Instruments Issued After May 27, 1969, and Before July 2, 1982 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments. How to file an amendment to 2011 taxes For information about showing the correct OID on your tax return, see the discussion under How To Report OID, earlier. How to file an amendment to 2011 taxes Your basis in the debt instrument is increased by the OID you include in income. How to file an amendment to 2011 taxes Form 1099-OID. How to file an amendment to 2011 taxes   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. How to file an amendment to 2011 taxes However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. How to file an amendment to 2011 taxes See Reduction for acquisition premium, later. How to file an amendment to 2011 taxes If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. How to file an amendment to 2011 taxes irs. How to file an amendment to 2011 taxes gov/pub1212 by clicking the link under Recent Developments. How to file an amendment to 2011 taxes Form 1099-OID not received. How to file an amendment to 2011 taxes    The OID listed is for each $1,000 of redemption price. How to file an amendment to 2011 taxes You must adjust the listed amount if your debt instrument has a different principal amount. How to file an amendment to 2011 taxes For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. How to file an amendment to 2011 taxes   If you held the debt instrument the entire year, use the OID shown in Section I-A for a calendar year. How to file an amendment to 2011 taxes (If your debt instrument is not listed in Section I-A, consult the issuer for information about the issue price and the OID that accrued for that year. How to file an amendment to 2011 taxes ) If you did not hold the debt instrument the entire year, figure your OID using the following method. How to file an amendment to 2011 taxes Divide the OID shown by 12. How to file an amendment to 2011 taxes Multiply the result in (1) by the number of complete and partial months (for example, 6½ months) you held the debt instrument during a calendar year. How to file an amendment to 2011 taxes This is the OID to include in income unless you paid an acquisition premium. How to file an amendment to 2011 taxes The reduction for acquisition premium is discussed next. How to file an amendment to 2011 taxes Reduction for acquisition premium. How to file an amendment to 2011 taxes   If you bought the debt instrument at an acquisition premium, figure the OID to include in income as follows. How to file an amendment to 2011 taxes Divide the total OID on the debt instrument by the number of complete months, and any part of a month, from the date of original issue to the maturity date. How to file an amendment to 2011 taxes This is the monthly OID. How to file an amendment to 2011 taxes Subtract from your cost the issue price and the accumulated OID from the date of issue to the date of purchase. How to file an amendment to 2011 taxes (If the result is zero or less, stop here. How to file an amendment to 2011 taxes You did not pay an acquisition premium. How to file an amendment to 2011 taxes ) Divide the amount figured in (2) by the number of complete months, and any part of a month, from the date of your purchase to the maturity date. How to file an amendment to 2011 taxes Subtract the amount figured in (3) from the amount figured in (1). How to file an amendment to 2011 taxes This is the OID to include in income for each month you hold the debt instrument during the year. How to file an amendment to 2011 taxes Transfers during the month. How to file an amendment to 2011 taxes   If you buy or sell a debt instrument on any day other than the same day of the month as the date of original issue, the ratable monthly portion of OID for the month of sale is divided between the seller and the buyer according to the number of days each held the debt instrument. How to file an amendment to 2011 taxes Your holding period for this purpose begins the day you acquire the debt instrument and ends the day before you dispose of it. How to file an amendment to 2011 taxes Debt Instruments Issued After July 1, 1982, and Before 1985 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments and increase your basis by the amount included. How to file an amendment to 2011 taxes For information about showing the correct OID on your tax return, see How To Report OID, earlier. How to file an amendment to 2011 taxes Form 1099-OID. How to file an amendment to 2011 taxes   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. How to file an amendment to 2011 taxes However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. How to file an amendment to 2011 taxes See Constant yield method and the discussions on acquisition premium that follow, later. How to file an amendment to 2011 taxes If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. How to file an amendment to 2011 taxes irs. How to file an amendment to 2011 taxes gov/pub1212 by clicking the link under Recent Developments. How to file an amendment to 2011 taxes Form 1099-OID not received. How to file an amendment to 2011 taxes    The OID listed is for each $1,000 of redemption price. How to file an amendment to 2011 taxes You must adjust the listed amount if your debt instrument has a different principal amount. How to file an amendment to 2011 taxes For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. How to file an amendment to 2011 taxes   If you held the debt instrument the entire year, use the OID shown in Section I-A. How to file an amendment to 2011 taxes (If your instrument is not listed in Section I-A, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. How to file an amendment to 2011 taxes ) If you did not hold the debt instrument the entire year, figure your OID using either of the following methods. How to file an amendment to 2011 taxes Method 1. How to file an amendment to 2011 taxes    Divide the total OID for a calendar year by 365 (366 for leap years). How to file an amendment to 2011 taxes Multiply the result in (1) by the number of days you held the debt instrument during that particular year. How to file an amendment to 2011 taxes  This computation is an approximation and may result in a slightly higher OID than Method 2. How to file an amendment to 2011 taxes Method 2. How to file an amendment to 2011 taxes    Look up the daily OID for the first accrual period you held the debt instrument during a calendar year. How to file an amendment to 2011 taxes (See Accrual period under Constant yield method, next. How to file an amendment to 2011 taxes ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. How to file an amendment to 2011 taxes If you held the debt instrument for part of both accrual periods, repeat (1) and (2) for the second accrual period. How to file an amendment to 2011 taxes Add the results of (2) and (3). How to file an amendment to 2011 taxes This is the OID to include in income, unless you paid an acquisition premium. How to file an amendment to 2011 taxes (The reduction for acquisition premium is discussed later. How to file an amendment to 2011 taxes ) Constant yield method. How to file an amendment to 2011 taxes   This discussion shows how to figure OID on debt instruments issued after July 1, 1982, and before 1985, using a constant yield method. How to file an amendment to 2011 taxes OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. How to file an amendment to 2011 taxes   Figure the OID allocable to any accrual period as follows. How to file an amendment to 2011 taxes Multiply the adjusted issue price at the beginning of the accrual period by the debt instrument's yield to maturity. How to file an amendment to 2011 taxes Subtract from the result in (1) any qualified stated interest allocable to the accrual period. How to file an amendment to 2011 taxes Accrual period. How to file an amendment to 2011 taxes   An accrual period for any OID debt instrument issued after July 1, 1982, and before 1985 is each 1-year period beginning on the date of the issue of the obligation and each anniversary thereafter, or the shorter period to maturity for the last accrual period. How to file an amendment to 2011 taxes Your tax year will usually include parts of two accrual periods. How to file an amendment to 2011 taxes Daily OID. How to file an amendment to 2011 taxes   The OID for any accrual period is allocated equally to each day in the accrual period. How to file an amendment to 2011 taxes You must include in income the sum of the OID amounts for each day you hold the debt instrument during the year. How to file an amendment to 2011 taxes If your tax year includes parts of two or more accrual periods, you must include the proper daily OID amounts for each accrual period. How to file an amendment to 2011 taxes Figuring daily OID. How to file an amendment to 2011 taxes   The daily OID for the initial accrual period is figured using the following formula. How to file an amendment to 2011 taxes   (ip × ytm) − qsi     p   ip = issue price ytm = yield to maturity qsi = qualified stated interest p = number of days in accrual period         The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. How to file an amendment to 2011 taxes Reduction for acquisition premium on debt instruments purchased before July 19, 1984. How to file an amendment to 2011 taxes   If you bought the debt instrument at an acquisition premium before July 19, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. How to file an amendment to 2011 taxes Figure the daily acquisition premium by dividing the total acquisition premium by the number of days in the period beginning on your purchase date and ending on the day before the date of maturity. How to file an amendment to 2011 taxes Reduction for acquisition premium on debt instruments purchased after July 18, 1984. How to file an amendment to 2011 taxes   If you bought the debt instrument at an acquisition premium after July 18, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. How to file an amendment to 2011 taxes However, the method of figuring the daily acquisition premium is different from the method described in the preceding discussion. How to file an amendment to 2011 taxes To figure the daily acquisition premium under this method, multiply the daily OID by the following fraction. How to file an amendment to 2011 taxes The numerator is the acquisition premium. How to file an amendment to 2011 taxes The denominator is the total OID remaining for the debt instrument after your purchase date. How to file an amendment to 2011 taxes Section I-A is available at www. How to file an amendment to 2011 taxes irs. How to file an amendment to 2011 taxes gov/pub1212 and clicking the link under Recent Developments. How to file an amendment to 2011 taxes Using Section I-A to figure accumulated OID. How to file an amendment to 2011 taxes   If you bought your corporate debt instrument in a calendar year or the subsequent year, you can figure the accumulated OID to the date of purchase by adding the following amounts. How to file an amendment to 2011 taxes The amount from the “Total OID to January 1, YYYY” column for your debt instrument. How to file an amendment to 2011 taxes The OID from January 1 of a calendar year to the date of purchase, figured as follows. How to file an amendment to 2011 taxes Multiply the daily OID for the first accrual period in the calendar year by the number of days from January 1 to the date of purchase, or the end of the accrual period if the debt instrument was purchased in the second or third accrual period. How to file an amendment to 2011 taxes Multiply the daily OID for each subsequent accrual period by the number of days in the period to the date of purchase or the end of the accrual period, whichever applies. How to file an amendment to 2011 taxes Add the amounts figured in (2a) and (2b). How to file an amendment to 2011 taxes Debt Instruments Issued After 1984 If you hold debt instruments issued after 1984, you must report part of the OID in gross income each year that you own the debt instruments. How to file an amendment to 2011 taxes You must include the OID in gross income whether or not you hold the debt instrument as a capital asset. How to file an amendment to 2011 taxes Your basis in the debt instrument is increased by the OID you include in income. How to file an amendment to 2011 taxes For information about showing the correct OID on your tax return, see How To Report OID, earlier. How to file an amendment to 2011 taxes Form 1099-OID. How to file an amendment to 2011 taxes   You should receive a Form 1099-OID showing OID for the part of a calendar year you held the debt instrument. How to file an amendment to 2011 taxes However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. How to file an amendment to 2011 taxes See Constant yield method and Reduction for acquisition premium, later. How to file an amendment to 2011 taxes   You may also need to refigure the OID for a contingent payment or inflation-indexed debt instrument on which the amount reported on Form 1099-OID is inaccurate. How to file an amendment to 2011 taxes See Contingent Payment Debt Instruments or Inflation-Indexed Debt Instruments, later. How to file an amendment to 2011 taxes If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-B available at www. How to file an amendment to 2011 taxes irs. How to file an amendment to 2011 taxes gov/pub1212 by clicking the link under Recent Developments. How to file an amendment to 2011 taxes Form 1099-OID not received. How to file an amendment to 2011 taxes   The OID listed is for each $1,000 of redemption price. How to file an amendment to 2011 taxes You must adjust the listed amount if your debt instrument has a different principal amount. How to file an amendment to 2011 taxes For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. How to file an amendment to 2011 taxes   Use the OID shown in Section I-B for a calendar year if you held the debt instrument the entire year. How to file an amendment to 2011 taxes (If your debt instrument is not listed in Section I-B, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. How to file an amendment to 2011 taxes ) If you did not hold the debt instrument the entire year, figure your OID as follows. How to file an amendment to 2011 taxes Look up the daily OID for the first accrual period in which you held the debt instrument during a calendar year. How to file an amendment to 2011 taxes (See Accrual period under Constant yield method, later. How to file an amendment to 2011 taxes ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. How to file an amendment to 2011 taxes Repeat (1) and (2) for any remaining accrual periods in which you held the debt instrument. How to file an amendment to 2011 taxes Add the results of (2) and (3). How to file an amendment to 2011 taxes This is the OID to include in income for that year, unless you paid an acquisition premium. How to file an amendment to 2011 taxes (The reduction for acquisition premium is discussed later. How to file an amendment to 2011 taxes ) Tax-exempt bond. How to file an amendment to 2011 taxes   If you own a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. How to file an amendment to 2011 taxes You need to make this adjustment to determine if you have a gain or loss on a later disposition of the bond. How to file an amendment to 2011 taxes In general, use the rules that follow to determine your OID. How to file an amendment to 2011 taxes Constant yield method. How to file an amendment to 2011 taxes   This discussion shows how to figure OID on debt instruments issued after 1984 using a constant yield method. How to file an amendment to 2011 taxes (The special rules that apply to contingent payment debt instruments and inflation-indexed debt instruments are explained later. How to file an amendment to 2011 taxes ) OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. How to file an amendment to 2011 taxes   Figure the OID allocable to any accrual period as follows. How to file an amendment to 2011 taxes Multiply the adjusted issue price at the beginning of the accrual period by a fraction. How to file an amendment to 2011 taxes The numerator of the fraction is the debt instrument's yield to maturity and the denominator is the number of accrual periods per year. How to file an amendment to 2011 taxes The yield must be stated appropriately taking into account the length of the particular accrual period. How to file an amendment to 2011 taxes Subtract from the result in (1) any qualified stated interest allocable to the accrual period. How to file an amendment to 2011 taxes Accrual period. How to file an amendment to 2011 taxes   For debt instruments issued after 1984 and before April 4, 1994, an accrual period is each 6-month period that ends on the day that corresponds to the stated maturity date of the debt instrument or the date 6 months before that date. How to file an amendment to 2011 taxes For example, a debt instrument maturing on March 31 has accrual periods that end on September 30 and March 31 of each calendar year. How to file an amendment to 2011 taxes Any short period is included as the first accrual period. How to file an amendment to 2011 taxes   For debt instruments issued after April 3, 1994, accrual periods may be of any length and may vary in length over the term of the debt instrument, as long as each accrual period is no longer than 1 year and all payments are made on the first or last day of an accrual period. How to file an amendment to 2011 taxes However, the OID listed for these debt instruments in Section I-B has been figured using 6-month accrual periods. How to file an amendment to 2011 taxes Daily OID. How to file an amendment to 2011 taxes   The OID for any accrual period is allocated equally to each day in the accrual period. How to file an amendment to 2011 taxes Figure the amount to include in income by adding the OID for each day you hold the debt instrument during the year. How to file an amendment to 2011 taxes Since your tax year will usually include parts of two or more accrual periods, you must include the proper daily OID for each accrual period. How to file an amendment to 2011 taxes If your debt instrument has 6-month accrual periods, your tax year will usually include one full 6-month accrual period and parts of two other 6-month periods. How to file an amendment to 2011 taxes Figuring daily OID. How to file an amendment to 2011 taxes   The daily OID for the initial accrual period is figured using the following formula. How to file an amendment to 2011 taxes   (ip × ytm/n) − qsi     p   ip = issue price ytm = yield to maturity n = number of accrual periods in 1 year qsi = qualified stated interest p = number of days in accrual period       The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. How to file an amendment to 2011 taxes Example 5. How to file an amendment to 2011 taxes On January 1 of Year 1, you bought a 15-year, 10% debt instrument of A Corporation at original issue for $86,235. How to file an amendment to 2011 taxes 17. How to file an amendment to 2011 taxes According to the prospectus, the debt instrument matures on December 31 of Year 15 at a stated redemption price of $100,000. How to file an amendment to 2011 taxes The yield to maturity is 12%, compounded semiannually. How to file an amendment to 2011 taxes The debt instrument provides for qualified stated interest payments of $5,000 on June 30 and December 31 of each calendar year. How to file an amendment to 2011 taxes The accrual periods are the 6-month periods ending on each of these dates. How to file an amendment to 2011 taxes The number of days for the first accrual period (January 1 through June 30) is 181 days (182 for leap years). How to file an amendment to 2011 taxes The daily OID for the first accrual period is figured as follows. How to file an amendment to 2011 taxes   ($86,235. How to file an amendment to 2011 taxes 17 x . How to file an amendment to 2011 taxes 12/2) – $5,000     181 days     = $174. How to file an amendment to 2011 taxes 11020 = $. How to file an amendment to 2011 taxes 96193   181           The adjusted issue price at the beginning of the second accrual period is the issue price plus the OID previously includible in income ($86,235. How to file an amendment to 2011 taxes 17 + $174. How to file an amendment to 2011 taxes 11), or $86,409. How to file an amendment to 2011 taxes 28. How to file an amendment to 2011 taxes The number of days for the second accrual period (July 1 through December 31) is 184 days. How to file an amendment to 2011 taxes The daily OID for the second accrual period is figured as follows. How to file an amendment to 2011 taxes   ($86,409. How to file an amendment to 2011 taxes 28 x . How to file an amendment to 2011 taxes 12/2) – $5,000     184 days     = $184. How to file an amendment to 2011 taxes 55681 = $1. How to file an amendment to 2011 taxes 00303   184 Since the first and second accrual periods coincide exactly with your tax year, you include in income for Year 1 the OID allocable to the first two accrual periods, $174. How to file an amendment to 2011 taxes 11 ($. How to file an amendment to 2011 taxes 95665 × 182 days) plus $184. How to file an amendment to 2011 taxes 56 ($1. How to file an amendment to 2011 taxes 00303 × 184 days), or $358. How to file an amendment to 2011 taxes 67. How to file an amendment to 2011 taxes Add the OID to the $10,000 interest you report on your income tax return for Year 1. How to file an amendment to 2011 taxes Example 6. How to file an amendment to 2011 taxes Assume the same facts as in Example 5, except that you bought the debt instrument at original issue on May 1 of Year 1, with a maturity date of April 30, Year 16. How to file an amendment to 2011 taxes Also, the interest payment dates are October 31 and April 30 of each calendar year. How to file an amendment to 2011 taxes The accrual periods are the 6-month periods ending on each of these dates. How to file an amendment to 2011 taxes The number of days for the first accrual period (May 1 through October 31) is 184 days. How to file an amendment to 2011 taxes The daily OID for the first accrual period is figured as follows. How to file an amendment to 2011 taxes   ($86,235. How to file an amendment to 2011 taxes 17 x . How to file an amendment to 2011 taxes 12/2) – $5,000     184 days     = $174. How to file an amendment to 2011 taxes 11020 = $. How to file an amendment to 2011 taxes 94625   184           The number of days for the second accrual period (November 1 through April 30) is 181 days (182 for leap years). How to file an amendment to 2011 taxes The daily OID for the second accrual period is figured as follows. How to file an amendment to 2011 taxes   ($86,409. How to file an amendment to 2011 taxes 28 x . How to file an amendment to 2011 taxes 12/2) – $5,000     181 days     = $184. How to file an amendment to 2011 taxes 55681 = $1. How to file an amendment to 2011 taxes 01965   181 If you hold the debt instrument through the end of Year 1, you must include $236. How to file an amendment to 2011 taxes 31 of OID in income. How to file an amendment to 2011 taxes This is $174. How to file an amendment to 2011 taxes 11 ($. How to file an amendment to 2011 taxes 94625 × 184 days) for the period May 1 through October 31 plus $62. How to file an amendment to 2011 taxes 20 ($1. How to file an amendment to 2011 taxes 01965 × 61 days) for the period November 1 through December 31. How to file an amendment to 2011 taxes The OID is added to the $5,000 interest income paid on October 31 of Year 1. How to file an amendment to 2011 taxes Your basis in the debt instrument is increased by the OID you include in income. How to file an amendment to 2011 taxes On January 1 of Year 2, your basis in the A Corporation debt instrument is $86,471. How to file an amendment to 2011 taxes 48 ($86,235. How to file an amendment to 2011 taxes 17 + $236. How to file an amendment to 2011 taxes 31). How to file an amendment to 2011 taxes Short first accrual period. How to file an amendment to 2011 taxes   You may have to make adjustments if a debt instrument has a short first accrual period. How to file an amendment to 2011 taxes For example, a debt instrument with 6-month accrual periods that is issued on February 15 and matures on October 31 has a short first accrual period that ends April 30. How to file an amendment to 2011 taxes (The remaining accrual periods begin on May 1 and November 1. How to file an amendment to 2011 taxes ) For this short period, figure the daily OID as described earlier, but adjust the yield for the length of the short accrual period. How to file an amendment to 2011 taxes You may use any reasonable compounding method in determining OID for a short period. How to file an amendment to 2011 taxes Examples of reasonable compounding methods include continuous compounding and monthly compounding (that is, simple interest within a month). How to file an amendment to 2011 taxes Consult your tax advisor for more information about making this computation. How to file an amendment to 2011 taxes   The OID for the final accrual period is the difference between the amount payable at maturity (other than a payment of qualified stated interest) and the adjusted issue price at the beginning of the final accrual period. How to file an amendment to 2011 taxes Reduction for acquisition premium. How to file an amendment to 2011 taxes   If you bought the debt instrument at an acquisition premium, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. How to file an amendment to 2011 taxes To figure the daily acquisition premium, multiply the daily OID by the following fraction. How to file an amendment to 2011 taxes The numerator is the acquisition premium. How to file an amendment to 2011 taxes The denominator is the total OID remaining for the debt instrument after your purchase date. How to file an amendment to 2011 taxes Example 7. How to file an amendment to 2011 taxes Assume the same facts as in Example 6, except that you bought the debt instrument on November 1 of Year 1 for $87,000, after its original issue on May 1 of Year 1. How to file an amendment to 2011 taxes The adjusted issue price on November 1 of Year 1 is $86,409. How to file an amendment to 2011 taxes 28 ($86,235. How to file an amendment to 2011 taxes 17 + $174. How to file an amendment to 2011 taxes 11). How to file an amendment to 2011 taxes In this case, you paid an acquisition premium of $590. How to file an amendment to 2011 taxes 72 ($87,000 − $86,409. How to file an amendment to 2011 taxes 28). How to file an amendment to 2011 taxes The daily OID for the accrual period November 1 through April 30, reduced for the acquisition premium, is figured as follows. How to file an amendment to 2011 taxes 1) Daily OID on date of purchase (2nd accrual period) $1. How to file an amendment to 2011 taxes 01965*  2)  Acquisition premium $590. How to file an amendment to 2011 taxes 72    3)  Total OID remaining after purchase date ($13,764. How to file an amendment to 2011 taxes 83 − $174. How to file an amendment to 2011 taxes 11) 13,590. How to file an amendment to 2011 taxes 72   4) Line 2 ÷ line 3 . How to file an amendment to 2011 taxes 04346  5)  Line 1 × line 4 . How to file an amendment to 2011 taxes 04432  6)  Daily OID reduced for the acquisition premium. How to file an amendment to 2011 taxes Line 1 − line 5 $0. How to file an amendment to 2011 taxes 97533  * As shown in Example 6. How to file an amendment to 2011 taxes The total OID to include in income for Year 1 is $59. How to file an amendment to 2011 taxes 50 ($. How to file an amendment to 2011 taxes 97533 × 61 days). How to file an amendment to 2011 taxes Contingent Payment Debt Instruments This discussion shows how to figure OID on a contingent payment debt instrument issued after August 12, 1996, that was issued for cash or publicly traded property. How to file an amendment to 2011 taxes In general, a contingent payment debt instrument provides for one or more payments that are contingent as to timing or amount. How to file an amendment to 2011 taxes If you hold a contingent payment bond, you must report OID as it accrues each year. How to file an amendment to 2011 taxes Because the actual payments on a contingent payment debt instrument cannot be known in advance, issuers and holders cannot use the constant yield method (discussed earlier under Debt Instruments Issued After 1984) without making certain assumptions about the payments on the debt instrument. How to file an amendment to 2011 taxes To figure OID accruals on contingent payment debt instruments, holders and issuers must use the noncontingent bond method. How to file an amendment to 2011 taxes Noncontingent bond method. How to file an amendment to 2011 taxes    Under this method, the issuer must compute a comparable yield for the debt instrument and, based on this yield, construct a projected payment schedule for the instrument, which includes a projected fixed amount for each contingent payment. How to file an amendment to 2011 taxes In general, holders and issuers accrue OID on this projected payment schedule using the constant yield method that applies to fixed payment debt instruments. How to file an amendment to 2011 taxes When a contingent payment differs from the projected fixed amount, the holders and issuers make adjustments to their OID accruals. How to file an amendment to 2011 taxes If the actual contingent payment is larger than expected, both the issuer and the holder increase their OID accruals. How to file an amendment to 2011 taxes If the actual contingent payment is smaller than expected, holders and issuers generally decrease their OID accruals. How to file an amendment to 2011 taxes Form 1099-OID. How to file an amendment to 2011 taxes   The amount shown on Form 1099-OID in box 1 you receive for a contingent payment debt instrument may not be the correct amount to include in income. How to file an amendment to 2011 taxes For example, the amount may not be correct if the contingent payment was different from the projected amount. How to file an amendment to 2011 taxes If the amount in box 1 is not correct, you must figure the OID to report on your return under the following rules. How to file an amendment to 2011 taxes For information on showing an OID adjustment on your tax return, see How To Report OID, earlier. How to file an amendment to 2011 taxes Figuring OID. How to file an amendment to 2011 taxes   To figure OID on a contingent payment debt instrument, you need to know the “comparable yield” and “projected payment schedule” of the debt instrument. How to file an amendment to 2011 taxes The issuer must make these available to you. How to file an amendment to 2011 taxes Comparable yield. How to file an amendment to 2011 taxes   The comparable yield generally is the yield at which the issuer would issue a fixed rate debt instrument with terms and conditions similar to those of the contingent payment debt instrument. How to file an amendment to 2011 taxes The comparable yield is determined as of the debt instrument's issue date. How to file an amendment to 2011 taxes Projected payment schedule. How to file an amendment to 2011 taxes   The projected payment schedule for a contingent payment debt instrument includes all fixed payments due under the instrument and a projected fixed amount for each contingent payment. How to file an amendment to 2011 taxes The projected payment schedule is created by the issuer as of the debt instrument's issue date. How to file an amendment to 2011 taxes It is used to determine the issuer's and holder's interest accruals and adjustments. How to file an amendment to 2011 taxes Steps for figuring OID. How to file an amendment to 2011 taxes   Figure the OID on a contingent payment debt instrument in two steps. How to file an amendment to 2011 taxes Figure the OID using the constant yield method (discussed earlier under Debt Instruments Issued After 1984 ) that applies to fixed payment debt instruments. How to file an amendment to 2011 taxes Use the comparable yield as the yield to maturity. How to file an amendment to 2011 taxes In general, use the projected payment schedule to determine the instrument's adjusted issue price at the beginning of each accrual period (other than the initial period). How to file an amendment to 2011 taxes Do not treat any amount payable as qualified stated interest. How to file an amendment to 2011 taxes Adjust the OID in (1) to account for actual contingent payments. How to file an amendment to 2011 taxes If the contingent payment is greater than the projected fixed amount, you have a positive adjustment. How to file an amendment to 2011 taxes If the contingent payment is less than the projected fixed amount, you have a negative adjustment. How to file an amendment to 2011 taxes Net positive adjustment. How to file an amendment to 2011 taxes   A net positive adjustment exists for a tax year when the total of any positive adjustments described in (2) above for the tax year is more than the total of any negative adjustments for the tax year. How to file an amendment to 2011 taxes Treat a net positive adjustment as additional OID for the tax year. How to file an amendment to 2011 taxes Net negative adjustment. How to file an amendment to 2011 taxes   A net negative adjustment exists for a tax year when the total of any negative adjustments described in (2) above for the tax year is more than the total of any positive adjustments for the tax year. How to file an amendment to 2011 taxes Use a net negative adjustment to offset OID on the debt instrument for the tax year. How to file an amendment to 2011 taxes If the net negative adjustment is more than the OID on the debt instrument for the tax year, you can claim the difference as an ordinary loss. How to file an amendment to 2011 taxes However, the amount you can claim as an ordinary loss is limited to the OID on the debt instrument you included in income in prior tax years. How to file an amendment to 2011 taxes You must carry forward any net negative adjustment that is more than the total OID for the tax year and prior tax years and treat it as a negative adjustment in the next tax year. How to file an amendment to 2011 taxes Basis adjustments. How to file an amendment to 2011 taxes   In general, increase your basis in a contingent payment debt instrument by the OID included in income. How to file an amendment to 2011 taxes Your basis, however, is not affected by any negative or positive adjustments. How to file an amendment to 2011 taxes Decrease your basis by any noncontingent payment received and the projected contingent payment scheduled to be received. How to file an amendment to 2011 taxes Treatment of gain or loss on sale or exchange. How to file an amendment to 2011 taxes   If you sell a contingent payment debt instrument at a gain, your gain is ordinary income (interest income), even if you hold the debt instrument as a capital asset. How to file an amendment to 2011 taxes If you sell a contingent payment debt instrument at a loss, your loss is an ordinary loss to the extent of your prior OID accruals on the debt instrument. How to file an amendment to 2011 taxes If the debt instrument is a capital asset, treat any loss that is more than your prior OID accruals as a capital loss. How to file an amendment to 2011 taxes See Regulations section 1. How to file an amendment to 2011 taxes 1275-4 for exceptions to these rules. How to file an amendment to 2011 taxes Premium, acquisition premium, and market discount. How to file an amendment to 2011 taxes   The rules for accruing premium, acquisition premium, and market discount do not apply to a contingent payment debt instrument. How to file an amendment to 2011 taxes See Regulations section 1. How to file an amendment to 2011 taxes 1275-4 to determine how to account for these items. How to file an amendment to 2011 taxes Inflation-Indexed Debt Instruments This discussion shows how you figure OID on certain inflation-indexed debt instruments issued after January 5, 1997. How to file an amendment to 2011 taxes An inflation-indexed debt instrument is generally a debt instrument on which the payments are adjusted for inflation and d
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The How To File An Amendment To 2011 Taxes

How to file an amendment to 2011 taxes 4. How to file an amendment to 2011 taxes   Communications and Air Transportation Taxes Table of Contents Uncollected Tax Report Communications TaxLocal-only service. How to file an amendment to 2011 taxes Private communication service. How to file an amendment to 2011 taxes Exemptions Credits or Refunds Air Transportation TaxesTransportation of Persons by Air International Air Travel Facilities Transportation of Property by Air Special Rules on Transportation Taxes Excise taxes are imposed on amounts paid for certain facilities and services. How to file an amendment to 2011 taxes If you receive any payment on which tax is imposed, you are required to collect the tax, file returns, and pay the tax over to the government. How to file an amendment to 2011 taxes If you fail to collect and pay over the taxes, you may be liable for the trust fund recovery penalty. How to file an amendment to 2011 taxes See chapter 14, later. How to file an amendment to 2011 taxes Uncollected Tax Report A separate report is required to be filed by collecting agents of communications services and air transportation taxes if the person from whom the facilities or services tax (the tax) is required to be collected (the taxpayer) refuses to pay the tax, or it is impossible for the collecting agent to collect the tax. How to file an amendment to 2011 taxes The report must contain the name and address of the taxpayer, the type of facility provided or service rendered, the amount paid for the facility or service (the amount on which the tax is based), and the date paid. How to file an amendment to 2011 taxes Regular method taxpayers. How to file an amendment to 2011 taxes   For regular method taxpayers, the report must be filed by the due date of the Form 720 on which the tax would have been reported. How to file an amendment to 2011 taxes Alternative method taxpayers. How to file an amendment to 2011 taxes   For alternative method taxpayers, the report must be filed by the due date of the Form 720 that includes an adjustment to the separate account for the uncollected tax. How to file an amendment to 2011 taxes See Alternative method in  chapter 11. How to file an amendment to 2011 taxes Where to file. How to file an amendment to 2011 taxes    Do not file the uncollected tax report with Form 720. How to file an amendment to 2011 taxes Instead, mail the report to: Internal Revenue Service Excise Tax Program SE:S:SP:EX MS C9-109 5000 Ellin Rd. How to file an amendment to 2011 taxes  Lanham, MD 20706 Communications Tax A 3% tax is imposed on amounts paid for local telephone service and teletypewriter exchange service. How to file an amendment to 2011 taxes Local telephone service. How to file an amendment to 2011 taxes   This includes access to a local telephone system and the privilege of telephonic quality communication with most people who are part of the system. How to file an amendment to 2011 taxes Local telephone service also includes any facility or services provided in connection with this service. How to file an amendment to 2011 taxes The tax applies to lease payments for certain customer premises equipment (CPE) even though the lessor does not also provide access to a local telecommunications system. How to file an amendment to 2011 taxes Local-only service. How to file an amendment to 2011 taxes   Local-only service is local telephone service as described above, provided under a plan that does not include long distance telephone service or that separately states the charge for local service on the bill to customers. How to file an amendment to 2011 taxes Local-only service also includes any facility or services provided in connection with this service, even though these services and facilities may also be used with long-distance service. How to file an amendment to 2011 taxes Private communication service. How to file an amendment to 2011 taxes   Private communication service is not local telephone service. How to file an amendment to 2011 taxes Private communication service includes accessory-type services provided in connection with a Centrex, PBX, or other similar system for dual use accessory equipment. How to file an amendment to 2011 taxes However, the charge for the service must be stated separately from the charge for the basic system, and the accessory must function, in whole or in part, in connection with intercommunication among the subscriber's stations. How to file an amendment to 2011 taxes Teletypewriter exchange service. How to file an amendment to 2011 taxes   This includes access from a teletypewriter or other data station to a teletypewriter exchange system and the privilege of intercommunication by that station with most persons having teletypewriter or other data stations in the same exchange system. How to file an amendment to 2011 taxes Figuring the tax. How to file an amendment to 2011 taxes   The tax is based on the sum of all charges for local telephone service included in the bill. How to file an amendment to 2011 taxes However, if the bill groups individual items for billing and tax purposes, the tax is based on the sum of the individual items within that group. How to file an amendment to 2011 taxes The tax on the remaining items not included in any group is based on the charge for each item separately. How to file an amendment to 2011 taxes Do not include in the tax base state or local sales or use taxes that are separately stated on the taxpayer's bill. How to file an amendment to 2011 taxes Exemptions Payments for certain services or payments from certain users are exempt from the communications tax. How to file an amendment to 2011 taxes Nontaxable service. How to file an amendment to 2011 taxes   Nontaxable service means bundled service and long distance service. How to file an amendment to 2011 taxes Nontaxable service also includes pre-paid telephone cards and pre-paid cellular service. How to file an amendment to 2011 taxes Bundled service. How to file an amendment to 2011 taxes   Bundled service is local and long distance service provided under a plan that does not separately state the charge for the local telephone service. How to file an amendment to 2011 taxes Bundled service includes plans that provide both local and long distance service for either a flat monthly fee or a charge that varies with the elapsed transmission time for which the service is used. How to file an amendment to 2011 taxes Telecommunications companies provide bundled service for both landlines and wireless (cellular) service. How to file an amendment to 2011 taxes If Voice over Internet Protocol service provides both local and long distance service and the charges are not separately stated, such service is bundled service. How to file an amendment to 2011 taxes   The method for sending or receiving a call, such as on a landline telephone, wireless (cellular), or some other method, does not affect whether a service is local-only or bundled. How to file an amendment to 2011 taxes Long distance service. How to file an amendment to 2011 taxes   Long distance service is telephonic quality communication with persons whose telephones are outside the local telephone system of the caller. How to file an amendment to 2011 taxes Pre-paid telephone cards (PTC). How to file an amendment to 2011 taxes   A PTC will be treated as bundled service unless a PTC expressly states it is for local-only service. How to file an amendment to 2011 taxes Generally, the person responsible for collecting the tax is the carrier who transfers the PTC to the transferee. How to file an amendment to 2011 taxes The transferee is the first person that is not a carrier to whom a PTC is transferred by the carrier. How to file an amendment to 2011 taxes The transferee is the person liable for the tax and is eligible to request a credit or refund. How to file an amendment to 2011 taxes For more information, see Regulations section 49. How to file an amendment to 2011 taxes 4251-4. How to file an amendment to 2011 taxes   The holder is the person that purchases a PTC to use and not to resell. How to file an amendment to 2011 taxes Holders are not liable for the tax and cannot request a credit or refund. How to file an amendment to 2011 taxes Pre-paid cellular telephones. How to file an amendment to 2011 taxes   Rules similar to the PTC rules described above apply to pre-paid cellular telephones. How to file an amendment to 2011 taxes The transferee is the person eligible to request the credit or refund. How to file an amendment to 2011 taxes Installation charges. How to file an amendment to 2011 taxes   The tax does not apply to payments received for the installation of any instrument, wire, pole, switchboard, apparatus, or equipment. How to file an amendment to 2011 taxes However, the tax does apply to payments for the repair or replacement of those items incidental to ordinary maintenance. How to file an amendment to 2011 taxes Answering services. How to file an amendment to 2011 taxes   The tax does not apply to amounts paid for a private line, an answering service, and a one-way paging or message service if they do not provide access to a local telephone system and the privilege of telephonic communication as part of the local telephone system. How to file an amendment to 2011 taxes Mobile radio telephone service. How to file an amendment to 2011 taxes   The tax does not apply to payments for a two-way radio service that does not provide access to a local telephone system. How to file an amendment to 2011 taxes Coin-operated telephones. How to file an amendment to 2011 taxes   The tax for local telephone service does not apply to payments made for services by inserting coins in public coin-operated telephones. How to file an amendment to 2011 taxes But the tax applies if the coin-operated telephone service is furnished for a guaranteed amount. How to file an amendment to 2011 taxes Figure the tax on the amount paid under the guarantee plus any fixed monthly or other periodic charge. How to file an amendment to 2011 taxes Telephone-operated security systems. How to file an amendment to 2011 taxes   The tax does not apply to amounts paid for telephones used only to originate calls to a limited number of telephone stations for security entry into a building. How to file an amendment to 2011 taxes In addition, the tax does not apply to any amounts paid for rented communication equipment used in the security system. How to file an amendment to 2011 taxes News services. How to file an amendment to 2011 taxes   The tax on teletypewriter exchange service does not apply to charges for the following news services. How to file an amendment to 2011 taxes Services dealing exclusively with the collection or dissemination of news for or through the public press or radio or television broadcasting. How to file an amendment to 2011 taxes Services used exclusively in the collection or dissemination of news by a news ticker service furnishing a general news service similar to that of the public press. How to file an amendment to 2011 taxes This exemption applies to payments received for messages from one member of the news media to another member (or to or from their bona fide correspondents). How to file an amendment to 2011 taxes For the exemption to apply, the charge for these services must be billed in writing to the person paying for the service and that person must certify in writing that the services are used for an exempt purpose. How to file an amendment to 2011 taxes Services not exempted. How to file an amendment to 2011 taxes   The tax applies to amounts paid by members of the news media for local telephone service. How to file an amendment to 2011 taxes International organizations and the American Red Cross. How to file an amendment to 2011 taxes   The tax does not apply to communication services furnished to an international organization or to the American National Red Cross. How to file an amendment to 2011 taxes Nonprofit hospitals. How to file an amendment to 2011 taxes   The tax does not apply to telephone services furnished to income tax-exempt nonprofit hospitals for their use. How to file an amendment to 2011 taxes Also, the tax does not apply to amounts paid by these hospitals to provide local telephone service in the homes of their personnel who must be reached during their off-duty hours. How to file an amendment to 2011 taxes Nonprofit educational organizations. How to file an amendment to 2011 taxes   The tax does not apply to payments received for services and facilities furnished to a nonprofit educational organization for its use. How to file an amendment to 2011 taxes A nonprofit educational organization is one that satisfies all the following requirements. How to file an amendment to 2011 taxes It normally maintains a regular faculty and curriculum. How to file an amendment to 2011 taxes It normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. How to file an amendment to 2011 taxes It is exempt from income tax under section 501(a). How to file an amendment to 2011 taxes This includes a school operated by an organization exempt under section 501(c)(3) if the school meets the above qualifications. How to file an amendment to 2011 taxes Qualified blood collector organizations. How to file an amendment to 2011 taxes   The tax does not apply to telephone services furnished to qualified blood collector organizations for their use. How to file an amendment to 2011 taxes A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered with the IRS, and Registered by the Food and Drug Administration to collect blood. How to file an amendment to 2011 taxes Federal, state, and local government. How to file an amendment to 2011 taxes   The tax does not apply to communication services provided to the government of the United States, the government of any state or its political subdivisions, the District of Columbia, or the United Nations. How to file an amendment to 2011 taxes Treat an Indian tribal government as a state for the exemption from the communications tax only if the services involve the exercise of an essential tribal government function. How to file an amendment to 2011 taxes Exemption certificate. How to file an amendment to 2011 taxes   Any form of exemption certificate will be acceptable if it includes all the information required by the Internal Revenue Code and Regulations. How to file an amendment to 2011 taxes See Regulations section 49. How to file an amendment to 2011 taxes 4253-11. How to file an amendment to 2011 taxes File the certificate with the provider of the communication services. How to file an amendment to 2011 taxes An exemption certificate is not required for nontaxable services. How to file an amendment to 2011 taxes   The following users that are exempt from the communications tax do not have to file an annual exemption certificate after they have filed the initial certificate to claim an exemption from the communications tax. How to file an amendment to 2011 taxes The American National Red Cross and other international organizations. How to file an amendment to 2011 taxes Nonprofit hospitals. How to file an amendment to 2011 taxes Nonprofit educational organizations. How to file an amendment to 2011 taxes Qualified blood collector organizations. How to file an amendment to 2011 taxes State and local governments. How to file an amendment to 2011 taxes   The federal government does not have to file any exemption certificate. How to file an amendment to 2011 taxes   All other organizations must furnish exemption certificates when required. How to file an amendment to 2011 taxes Credits or Refunds If tax is collected and paid over for nontaxable services, or for certain services or users exempt from the communications tax, the collector or taxpayer may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. How to file an amendment to 2011 taxes Alternatively, the person who paid the tax may claim a refund. How to file an amendment to 2011 taxes For more information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. How to file an amendment to 2011 taxes Collectors. How to file an amendment to 2011 taxes   The collector may request a credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. How to file an amendment to 2011 taxes These requirements also apply to nontaxable service refunds. How to file an amendment to 2011 taxes Collectors using the regular method for deposits. How to file an amendment to 2011 taxes   Collectors using the regular method for deposits must use Form 720X to request a credit or refund if the collector has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. How to file an amendment to 2011 taxes Collectors using the alternative method for deposits. How to file an amendment to 2011 taxes   Collectors using the alternative method for deposits must adjust their separate accounts for the credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. How to file an amendment to 2011 taxes For more information, see the Instructions for Form 720. How to file an amendment to 2011 taxes Air Transportation Taxes Taxes are imposed on amounts paid for: Transportation of persons by air, Use of international air travel facilities, and Transportation of property by air. How to file an amendment to 2011 taxes Transportation of Persons by Air The tax on transportation of persons by air is made up of the: Percentage tax, and Domestic-segment tax. How to file an amendment to 2011 taxes Percentage tax. How to file an amendment to 2011 taxes   A tax of 7. How to file an amendment to 2011 taxes 5% applies to amounts paid for taxable transportation of persons by air. How to file an amendment to 2011 taxes Amounts paid for transportation include charges for layover or waiting time and movement of aircraft in deadhead service. How to file an amendment to 2011 taxes Mileage awards. How to file an amendment to 2011 taxes   The percentage tax may apply to an amount paid (in cash or in kind) to an air carrier (or any related person) for the right to provide mileage awards for, or other reductions in the cost of, any transportation of persons by air. How to file an amendment to 2011 taxes For example, this applies to mileage awards purchased by credit card companies, telephone companies, restaurants, hotels, and other businesses. How to file an amendment to 2011 taxes   Generally, the percentage tax does not apply to amounts paid for mileage awards where the mileage awards cannot, under any circumstances, be redeemed for air transportation that is subject to the tax. How to file an amendment to 2011 taxes Until regulations are issued, the following rules apply to mileage awards. How to file an amendment to 2011 taxes Amounts paid for mileage awards that cannot be redeemed for taxable transportation beginning and ending in the United States are not subject to the tax. How to file an amendment to 2011 taxes For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. How to file an amendment to 2011 taxes Therefore, amounts paid to a foreign air carrier for mileage awards are not subject to the tax. How to file an amendment to 2011 taxes Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are not subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation. How to file an amendment to 2011 taxes Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles will not be awarded in connection with the purchase of taxable transportation. How to file an amendment to 2011 taxes Domestic-segment tax. How to file an amendment to 2011 taxes   The domestic-segment tax is a flat dollar amount for each segment of taxable transportation for which an amount is paid. How to file an amendment to 2011 taxes However, see Rural airports, later. How to file an amendment to 2011 taxes A segment is a single takeoff and a single landing. How to file an amendment to 2011 taxes The amount of the domestic-segment tax is in the Instructions for Form 720. How to file an amendment to 2011 taxes Charter flights. How to file an amendment to 2011 taxes    If an aircraft is chartered, the domestic-segment tax for each segment of taxable transportation is figured by multiplying the tax by the number of passengers transported on the aircraft. How to file an amendment to 2011 taxes Rural airports. How to file an amendment to 2011 taxes   The domestic-segment tax does not apply to a segment to or from a rural airport. How to file an amendment to 2011 taxes An airport is a rural airport for a calendar year if fewer than 100,000 commercial passengers departed from the airport by air during the second preceding calendar year (the 100,000 passenger rule), and one of the following is true: The airport is not located within 75 miles of another airport from which 100,000 or more commercial passengers departed during the second preceding calendar year, The airport was receiving essential air service subsidies as of August 5, 1997, or The airport is not connected by paved roads to another airport. How to file an amendment to 2011 taxes   To apply the 100,000 passenger rule to any airport described in (3) above, only count commercial passengers departing from the airport by air on flight segments of at least 100 miles. How to file an amendment to 2011 taxes   An updated list of rural airports can be found on the Department of Transportation website at www. How to file an amendment to 2011 taxes dot. How to file an amendment to 2011 taxes gov and enter the phrase “Essential Air Service” in the search box. How to file an amendment to 2011 taxes Taxable transportation. How to file an amendment to 2011 taxes   Taxable transportation is transportation by air that meets either of the following tests. How to file an amendment to 2011 taxes It begins and ends either in the United States or at any place in Canada or Mexico not more than 225 miles from the nearest point on the continental United States boundary (this is the 225-mile zone). How to file an amendment to 2011 taxes It is directly or indirectly from one port or station in the United States to another port or station in the United States, but only if it is not a part of uninterrupted international air transportation, discussed later. How to file an amendment to 2011 taxes Round trip. How to file an amendment to 2011 taxes   A round trip is considered two separate trips. How to file an amendment to 2011 taxes The first trip is from the point of departure to the destination. How to file an amendment to 2011 taxes The second trip is the return trip from that destination. How to file an amendment to 2011 taxes Uninterrupted international air transportation. How to file an amendment to 2011 taxes   This means transportation entirely by air that does not begin and end in the United States or in the 225-mile zone if there is not more than a 12-hour scheduled interval between arrival and departure at any station in the United States. How to file an amendment to 2011 taxes For a special rule that applies to military personnel, see Exemptions, later. How to file an amendment to 2011 taxes Transportation between the continental U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes and Alaska or Hawaii. How to file an amendment to 2011 taxes   This transportation is partially exempt from the tax on transportation of persons by air. How to file an amendment to 2011 taxes The tax does not apply to the part of the trip between the point at which the route of transportation leaves or enters the continental United States (or a port or station in the 225-mile zone) and the point at which it enters or leaves Hawaii or Alaska. How to file an amendment to 2011 taxes Leaving or entering occurs when the route of the transportation passes over either the United States border or a point 3 nautical miles (3. How to file an amendment to 2011 taxes 45 statute miles) from low tide on the coast line, or when it leaves a port or station in the 225-mile zone. How to file an amendment to 2011 taxes Therefore, this transportation is subject to the percentage tax on the part of the trip in U. How to file an amendment to 2011 taxes S. How to file an amendment to 2011 taxes airspace, the domestic-segment tax for each domestic segment, and the tax on the use of international air travel facilities, discussed later. How to file an amendment to 2011 taxes Transportation within Alaska or Hawaii. How to file an amendment to 2011 taxes   The tax on transportation of persons by air applies to the entire fare paid in the case of flights between any of the Hawaiian Islands, and between any ports or stations in the Aleutian Islands or other ports or stations elsewhere in Alaska. How to file an amendment to 2011 taxes The tax applies even though parts of the flights may be over international waters or over Canada, if no point on the direct line of transportation between the ports or stations is more than 225 miles from the United States (Hawaii or Alaska). How to file an amendment to 2011 taxes Package tours. How to file an amendment to 2011 taxes   The air transportation taxes apply to “complimentary” air transportation furnished solely to participants in package holiday tours. How to file an amendment to 2011 taxes The amount paid for these package tours includes a charge for air transportation even though it may be advertised as “free. How to file an amendment to 2011 taxes ” This rule also applies to the tax on the use of international air travel facilities, discussed later. How to file an amendment to 2011 taxes Liability for tax. How to file an amendment to 2011 taxes   The person paying for taxable transportation is liable for the tax and, ordinarily, the person receiving the payment collects the tax, files the returns, and pays the tax over to the government. How to file an amendment to 2011 taxes However, if payment is made outside the United States for a prepaid order, exchange order, or similar order, the person furnishing the initial transportation provided for under that order must collect the tax. How to file an amendment to 2011 taxes    A travel agency that is an independent broker and sells tours on aircraft that it charters must collect the transportation tax, file the returns, and pay the tax over to the government. How to file an amendment to 2011 taxes However, a travel agency that sells tours as the agent of an airline must collect the tax and remit it to the airline for the filing of returns and for the payment of the tax over to the government. How to file an amendment to 2011 taxes An independent third party that is not under the airline's supervision or control, but is acting on behalf of, and receiving compensation from, a passenger, is not required to collect the tax and pay it to the government. How to file an amendment to 2011 taxes For more information on resellers of air transportation, see Revenue Ruling 2006-52. How to file an amendment to 2011 taxes You can find Revenue Ruling 2006-52 on page 761 of I. How to file an amendment to 2011 taxes R. How to file an amendment to 2011 taxes B. How to file an amendment to 2011 taxes 2006-43 at www. How to file an amendment to 2011 taxes irs. How to file an amendment to 2011 taxes gov/pub/irs-irbs/irb06-43. How to file an amendment to 2011 taxes pdf. How to file an amendment to 2011 taxes   The fact that the aircraft does not use public or commercial airports in taking off and landing has no effect on the tax. How to file an amendment to 2011 taxes But see Certain helicopter uses, later. How to file an amendment to 2011 taxes   For taxable transportation that begins and ends in the United States, the tax applies regardless of whether the payment is made in or outside the United States. How to file an amendment to 2011 taxes   If the tax is not paid when payment for the transportation is made, the air carrier providing the initial segment of the transportation that begins or ends in the United States becomes liable for the tax. How to file an amendment to 2011 taxes Exemptions. How to file an amendment to 2011 taxes   The tax on transportation of persons by air does not apply in the following situations. How to file an amendment to 2011 taxes See also Special Rules on Transportation Taxes, later. How to file an amendment to 2011 taxes Military personnel on international trips. How to file an amendment to 2011 taxes   When traveling in uniform at their own expense, United States military personnel on authorized leave are deemed to be traveling in uninterrupted international air transportation (defined earlier) even if the scheduled interval between arrival and departure at any station in the United States is actually more than 12 hours. How to file an amendment to 2011 taxes However, such personnel must buy their tickets within 12 hours after landing at the first domestic airport and accept the first available accommodation of the type called for by their tickets. How to file an amendment to 2011 taxes The trip must begin or end outside the United States and the 225-mile zone. How to file an amendment to 2011 taxes Certain helicopter uses. How to file an amendment to 2011 taxes   The tax does not apply to air transportation by helicopter if the helicopter is used for any of the following purposes. How to file an amendment to 2011 taxes Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. How to file an amendment to 2011 taxes Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). How to file an amendment to 2011 taxes Providing emergency medical transportation. How to file an amendment to 2011 taxes   However, during a use described in items (1) or (2), the tax applies if the helicopter takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. How to file an amendment to 2011 taxes For item (1), treat each flight segment as a separate flight. How to file an amendment to 2011 taxes Fixed-wing aircraft uses. How to file an amendment to 2011 taxes   The tax does not apply to air transportation by fixed-wing aircraft if the fixed-wing aircraft is used for any of the following purposes. How to file an amendment to 2011 taxes Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). How to file an amendment to 2011 taxes Providing emergency medical transportation. How to file an amendment to 2011 taxes The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. How to file an amendment to 2011 taxes   However, during a use described in item (1), the tax applies if the fixed-wing aircraft takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. How to file an amendment to 2011 taxes Skydiving. How to file an amendment to 2011 taxes   The tax does not apply to any air transportation exclusively for the purpose of skydiving. How to file an amendment to 2011 taxes Seaplanes. How to file an amendment to 2011 taxes   The tax does not apply to any air transportation by seaplane for any segment consisting of a takeoff from, and a landing on, water if the places where the takeoff and landing occur are not receiving financial assistance from the Airport and Airways Trust Fund. How to file an amendment to 2011 taxes Bonus tickets. How to file an amendment to 2011 taxes   The tax does not apply to free bonus tickets issued by an airline company to its customers who have satisfied all requirements to qualify for the bonus tickets. How to file an amendment to 2011 taxes However, the tax applies to amounts paid by customers for advance bonus tickets when customers have traveled insufficient mileage to fully qualify for the free advance bonus tickets. How to file an amendment to 2011 taxes International Air Travel Facilities A tax per person is imposed (whether in or outside the United States) for international flights that begin or end in the United States. How to file an amendment to 2011 taxes However, for a domestic segment that begins or ends in Alaska or Hawaii, a reduced tax per person applies only to departures. How to file an amendment to 2011 taxes This tax does not apply if all the transportation is subject to the percentage tax, discussed earlier. How to file an amendment to 2011 taxes It also doesn't apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. How to file an amendment to 2011 taxes See the Instructions for Form 720 for the tax rates. How to file an amendment to 2011 taxes Transportation of Property by Air A tax of 6. How to file an amendment to 2011 taxes 25% is imposed on amounts paid (whether in or outside the United States) for transportation of property by air. How to file an amendment to 2011 taxes The fact that the aircraft may not use public or commercial airports in taking off and landing has no effect on the tax. How to file an amendment to 2011 taxes The tax applies only to amounts paid to a person engaged in the business of transporting property by air for hire. How to file an amendment to 2011 taxes The tax applies only to transportation (including layover time and movement of aircraft in deadhead service) that begins and ends in the United States. How to file an amendment to 2011 taxes Thus, the tax does not apply to transportation of property by air that begins or ends outside the United States. How to file an amendment to 2011 taxes Exemptions. How to file an amendment to 2011 taxes   The tax on transportation of property by air does not apply in the following situations. How to file an amendment to 2011 taxes See also Special Rules on Transportation Taxes, later. How to file an amendment to 2011 taxes Cropdusting and firefighting service. How to file an amendment to 2011 taxes   The tax does not apply to amounts paid for cropdusting or aerial firefighting service. How to file an amendment to 2011 taxes Exportation. How to file an amendment to 2011 taxes    The tax does not apply to payments for transportation of property by air in the course of exportation (including to United States possessions) by continuous movement, as evidenced by the execution of Form 1363, Export Exemption Certificate. How to file an amendment to 2011 taxes See Form 1363 for more information. How to file an amendment to 2011 taxes Certain helicopter and fixed-wing air ambulance uses. How to file an amendment to 2011 taxes   The tax does not apply to amounts paid for the use of helicopters in construction to set heating and air conditioning units on roofs of buildings, to dismantle tower cranes, and to aid in construction of power lines and ski lifts. How to file an amendment to 2011 taxes   The tax also does not apply to air transportation by helicopter or fixed-wing aircraft for the purpose of providing emergency medical services. How to file an amendment to 2011 taxes The fixed-wing aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. How to file an amendment to 2011 taxes Skydiving. How to file an amendment to 2011 taxes   The tax does not apply to any air transportation exclusively for the purpose of skydiving. How to file an amendment to 2011 taxes Excess baggage. How to file an amendment to 2011 taxes    The tax does not apply to excess baggage accompanying a passenger on an aircraft operated on an established line. How to file an amendment to 2011 taxes Surtax on fuel used in a fractional ownership program aircraft. How to file an amendment to 2011 taxes   The tax does not apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. How to file an amendment to 2011 taxes Alaska and Hawaii. How to file an amendment to 2011 taxes   For transportation of property to and from Alaska and Hawaii, the tax in general does not apply to the portion of the transportation that is entirely outside the continental United States (or the 225-mile zone if the aircraft departs from or arrives at an airport in the 225-mile zone). How to file an amendment to 2011 taxes But the tax applies to flights between ports or stations in Alaska and the Aleutian Islands, as well as between ports or stations in Hawaii. How to file an amendment to 2011 taxes The tax applies even though parts of the flights may be over international waters or over Canada, if no point on a line drawn from where the route of transportation leaves the United States (Alaska) to where it reenters the United States (Alaska) is more than 225 miles from the United States. How to file an amendment to 2011 taxes Liability for tax. How to file an amendment to 2011 taxes   The person paying for taxable transportation is liable for the tax and, ordinarily, the person engaged in the business of transporting property by air for hire receives the payment, collects the tax, files the returns, and pays the tax over to the government. How to file an amendment to 2011 taxes   If tax is not paid when a payment is made outside the United States, the person furnishing the last segment of taxable transportation collects the tax from the person to whom the property is delivered in the United States. How to file an amendment to 2011 taxes Special Rules on Transportation Taxes In certain circumstances, special rules apply to the taxes on transportation of persons and property by air. How to file an amendment to 2011 taxes Aircraft used by affiliated corporations. How to file an amendment to 2011 taxes   The taxes do not apply to payments received by one member of an affiliated group of corporations from another member for services furnished in connection with the use of an aircraft. How to file an amendment to 2011 taxes However, the aircraft must be owned or leased by a member of the affiliated group and cannot be available for hire by a nonmember of the affiliated group. How to file an amendment to 2011 taxes Determine whether an aircraft is available for hire by a nonmember of an affiliated group on a flight-by-flight basis. How to file an amendment to 2011 taxes   For this rule, an affiliated group of corporations is any group of corporations connected with a common parent corporation through 80% or more of stock ownership. How to file an amendment to 2011 taxes Small aircraft. How to file an amendment to 2011 taxes   The taxes do not apply to transportation furnished by an aircraft having a maximum certificated takeoff weight of 6,000 pounds or less. How to file an amendment to 2011 taxes However, the taxes do apply if the aircraft is operated on an established line. How to file an amendment to 2011 taxes “Operated on an established line” means the aircraft operates with some degree of regularity between definite points. How to file an amendment to 2011 taxes However, it does not include any time an aircraft is being operated on a flight that is solely for sightseeing. How to file an amendment to 2011 taxes   Consider an aircraft to be operated on an established line if it is operated on a charter basis between two cities also served by that carrier on a regularly scheduled basis. How to file an amendment to 2011 taxes   Also, the taxes apply if the aircraft is jet-powered, regardless of its maximum certificated takeoff weight or whether or not it is operated on an established line. How to file an amendment to 2011 taxes Mixed load of persons and property. How to file an amendment to 2011 taxes   If a single amount is paid for air transportation of persons and property, the payment must be allocated between the amount subject to the tax on transportation of persons and the amount subject to the tax on transportation of property. How to file an amendment to 2011 taxes The allocation must be reasonable and supported by adequate records. How to file an amendment to 2011 taxes Credits or refunds. How to file an amendment to 2011 taxes   If tax is collected and paid over for air transportation that is not taxable air transportation, the collector may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. How to file an amendment to 2011 taxes Alternatively, the person who paid the tax may claim a refund. How to file an amendment to 2011 taxes For information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. How to file an amendment to 2011 taxes Prev  Up  Next   Home   More Online Publications