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Irs Filing Deadline

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Irs filing deadline 2. Irs filing deadline   Maximum Amount Contributable (MAC) Table of Contents Components of Your MAC How Do I Figure My MAC?Elective deferrals only. Irs filing deadline Nonelective contributions only. Irs filing deadline Elective deferrals and nonelective contributions. Irs filing deadline When Should I Figure My MAC? Throughout this publication, the limit on the amount that can be contributed to your 403(b) account for any year is referred to as your maximum amount contributable (MAC). Irs filing deadline This chapter: Introduces the components of your MAC, Tells you how to figure your MAC, and Tells you when to figure your MAC. Irs filing deadline Components of Your MAC Generally, before you can determine your MAC, you must first figure the components of your MAC. Irs filing deadline The components of your MAC are: The limit on annual additions (chapter 3), and The limit on elective deferrals (chapter 4). Irs filing deadline How Do I Figure My MAC? Generally, contributions to your 403(b) account are limited to the lesser of: The limit on annual additions, or The limit on elective deferrals. Irs filing deadline Depending upon the type of contributions made to your 403(b) account, only one of the limits may apply to you. Irs filing deadline Which limit applies. Irs filing deadline   Whether you must apply one or both of the limits depends on the type of contributions made to your 403(b) account during the year. Irs filing deadline Elective deferrals only. Irs filing deadline   If the only contributions made to your 403(b) account during the year were elective deferrals made under a salary reduction agreement, you will need to figure both of the limits. Irs filing deadline Your MAC is the lesser of the two limits. Irs filing deadline Nonelective contributions only. Irs filing deadline   If the only contributions made to your 403(b) account during the year were nonelective contributions (employer contributions not made under a salary reduction agreement), you will only need to figure the limit on annual additions. Irs filing deadline Your MAC is the limit on annual additions. Irs filing deadline Elective deferrals and nonelective contributions. Irs filing deadline   If the contributions made to your 403(b) account were a combination of both elective deferrals made under a salary reduction agreement and nonelective contributions (employer contributions not made under a salary reduction agreement), you will need to figure both limits. Irs filing deadline Your MAC is the limit on the annual additions. Irs filing deadline   You need to figure the limit on elective deferrals to determine if you have excess elective deferrals, which are explained in chapter 7. Irs filing deadline Worksheets. Irs filing deadline   Worksheets are available in chapter 9 to help you figure your MAC. Irs filing deadline When Should I Figure My MAC? At the beginning of 2014, you should refigure your 2013 MAC based on your actual compensation for 2013. Irs filing deadline This will allow you to determine if the amount that has been contributed to your 403(b) account for 2013 has exceeded the allowable limits. Irs filing deadline In some cases, this will allow you to avoid penalties and additional taxes. Irs filing deadline See chapter 7. Irs filing deadline Generally, you should figure your MAC for the current year at the beginning of each tax year using a conservative estimate of your compensation. Irs filing deadline If your compensation changes during the year, you should refigure your MAC based on a revised conservative estimate. Irs filing deadline By doing this, you will be able to determine if contributions to your 403(b) account can be increased or should be decreased for the year. Irs filing deadline Prev  Up  Next   Home   More Online Publications
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Individual Shared Responsibility Provision – Calculating the Payment

 

The individual shared responsibility provision requires you and each member of your family to either have basic health insurance coverage (also known as minimum essential coverage), qualify for an exemption, or make an individual shared responsibility payment when you file your federal income tax return. It is important to remember that choosing to make the individual shared responsibility payment instead of purchasing minimum essential coverage means you will also have to pay the entire cost of all your medical care. You won't be protected from the kind of very high medical bills that can sometimes lead to bankruptcy.

If you must make an individual shared responsibility payment with your return, the annual payment amount is the greater of a percentage of your household income or a flat dollar amount, but is capped at the national average premium for a bronze level health plan available through the Marketplace. You will owe 1/12th of the annual payment for each month you or your dependent(s) don’t have either coverage or an exemption.

For 2014, the annual payment amount is:

  • The greater of:
    • 1 percent of your household income that is above the tax return filing threshold for your filing status, or
    • Your family’s flat dollar amount, which is $95 per adult and $47.50 per child, limited to a family maximum of $285,
  • But capped at the cost of the national average premium for a bronze level health plan available through the Marketplace in 2014.

Calculating your payment requires you to know your household income and your tax return filing threshold.

  • Household income is the adjusted gross income from your tax return plus any excludible foreign earned income and tax-exempt interest you receive during the taxable year. Household income also includes the incomes of all of your dependents who are required to file tax returns.
  • Tax return filing threshold is the amount of gross income an individual of your age and with your filing status (e.g., single, married filing jointly, head of household) must make to be required to file a tax return.

2014 Federal Tax Filing Requirement Thresholds

Filing Status Age Must File a Return If Gross Income Exceeds
Single Under 65 $10,150
  65 or older $11,700
Head of Household Under 65 $13,050
  65 or older $14,600
Married Filing Jointly  Under 65 (both spouses) $20,300
  65 or older (one spouse) $21,500
  65 or older (both spouses) $22,700
Married Filing Separately  Any age $3,950
Qualifying Widow(er) with Dependent Children Under 65 $16,350
  65 or older $17,550

 

Examples

In the examples below, we assume that the payment amounts do not exceed the national average premium for bronze level coverage for the individuals involved. These examples are used only to represent the mechanics of calculating the payment and are not estimates of current or future health insurance premium costs. For information on the cost of bronze level plans, visit HealthCare.gov.

Example 1: Single individual with $40,000 income

Jim, an unmarried individual with no dependents, does not have minimum essential coverage for any month during 2014 and does not qualify for an exemption. For 2014, Jim’s household income is $40,000 and his filing threshold is $10,150.

  • To determine his payment using the income formula, subtract $10,150 (filing threshold) from $40,000 (2014 household income). The result is $29,850. One percent of $29,850 equals $298.50.
  • Jim’s flat dollar amount is $95.

Because $298.50 is greater than $95 (and is less than the national average premium for bronze level coverage for 2014), Jim’s shared responsibility payment for 2014 is $298.50, or $24.87 for each month he is uninsured (1/12 of $298.50 equals $24.87).

Jim will make his shared responsibility payment for the months he was uninsured when he files his 2014 income tax return, which is due in April 2015.

Example 2: Married couple with 2 children, $70,000 income

Eduardo and Julia are married and have two children under 18. They do not have minimum essential coverage for any family member for any month during 2014 and no one in the family qualifies for an exemption. For 2014, their household income is $70,000 and their filing threshold is $20,300.

  • To determine their payment using the income formula, subtract $20,300 (filing threshold) from $70,000 (2014 household income). The result is $49,700. One percent of $49,700 equals $497.
  • Eduardo and Julia’s flat dollar amount is $285, or $95 per adult and $47.50 per child. The total of $285 is the flat dollar amount in 2014.

Because $497 is greater than $285 (and is less than the national average premium for bronze level coverage for 2014), Eduardo and Julia’s shared responsibility payment is $497 for 2014, or $41.41 per month for each month the family is uninsured (1/12 of $497 equals $41.41).

Page Last Reviewed or Updated: 24-Mar-2014

The Irs Filing Deadline

Irs filing deadline 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. Irs filing deadline Adjustment for premium. Irs filing deadline Adjustment for acquisition premium. Irs filing deadline Adjustment for market discount. Irs filing deadline 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. Irs filing deadline “Original issue discount” is defined first. Irs filing deadline The other terms are listed alphabetically. Irs filing deadline Original issue discount (OID). Irs filing deadline   OID is a form of interest. Irs filing deadline 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). Irs filing deadline Zero coupon bonds and debt instruments that pay no stated interest until maturity are examples of debt instruments that have OID. Irs filing deadline Accrual period. Irs filing deadline   An accrual period is an interval of time used to measure OID. Irs filing deadline The length of an accrual period can be 6 months, a year, or some other period, depending on when the debt instrument was issued. Irs filing deadline Acquisition premium. Irs filing deadline   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. Irs filing deadline A debt instrument does not have acquisition premium, however, if the debt instrument was purchased at a premium. Irs filing deadline See Premium, later. Irs filing deadline Adjusted issue price. Irs filing deadline   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. Irs filing deadline In general, the adjusted issue price at the beginning of the debt instrument's first accrual period is its issue price. Irs filing deadline 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. Irs filing deadline Debt instrument. Irs filing deadline   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). Irs filing deadline It generally does not include an annuity contract. Irs filing deadline Issue price. Irs filing deadline   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. Irs filing deadline Market discount. Irs filing deadline   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. Irs filing deadline 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. Irs filing deadline The market discount is the difference between the issue price plus accrued OID and your adjusted basis. Irs filing deadline Premium. Irs filing deadline   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. Irs filing deadline The premium is the excess of the adjusted basis over the payable amounts. Irs filing deadline See Publication 550 for information on the tax treatment of bond premium. Irs filing deadline Qualified stated interest. Irs filing deadline   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. Irs filing deadline Stated redemption price at maturity. Irs filing deadline   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. Irs filing deadline Yield to maturity (YTM). Irs filing deadline   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. Irs filing deadline The YTM is generally shown on the face of the debt instrument or in the literature you receive from your broker. Irs filing deadline If you do not have this information, consult your broker, tax advisor, or the issuer. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline The OID amounts listed are figured without reference to the price or date at which you acquired the debt instrument. Irs filing deadline 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. Irs filing deadline The following discussions explain what information is contained in each section of the list. Irs filing deadline Section I. Irs filing deadline   This section contains publicly offered, long-term debt instruments. Irs filing deadline Section I-A: Corporate Debt Instruments Issued Before 1985. Irs filing deadline Section I-B: Corporate Debt Instruments Issued After 1984. Irs filing deadline Section I-C: Inflation-Indexed Debt Instruments. Irs filing deadline For each publicly offered debt instrument in Section I, the list contains the following information. Irs filing deadline The name of the issuer. Irs filing deadline The Committee on Uniform Security Identification Procedures (CUSIP) number. Irs filing deadline The issue date. Irs filing deadline The maturity date. Irs filing deadline The issue price expressed as a percent of principal or of stated redemption price at maturity. Irs filing deadline The annual stated or coupon interest rate. Irs filing deadline (This rate is shown as 0. Irs filing deadline 00 if no annual interest payments are provided. Irs filing deadline ) The yield to maturity will be added to Section I-B for bonds issued after December 31, 2006. Irs filing deadline The total OID accrued up to January 1 of a calendar year. Irs filing deadline (This information is not available for every instrument. Irs filing deadline ) 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. Irs filing deadline The total OID per $1,000 of principal or maturity value for a calendar year and a subsequent year. Irs filing deadline Section II. Irs filing deadline   This section contains stripped coupons and principal components of U. Irs filing deadline S. Irs filing deadline Treasury and Government-Sponsored Enterprise debt instruments. Irs filing deadline 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. Irs filing deadline This section also includes debt instruments backed by U. Irs filing deadline S. Irs filing deadline Treasury securities that represent ownership interests in those securities. Irs filing deadline   The obligations listed in Section II are arranged by maturity date. Irs filing deadline The amounts listed are the total OID for a calendar year per $1,000 of redemption price. Irs filing deadline Section III. Irs filing deadline   This section contains short-term discount obligations. Irs filing deadline Section III-A: Short-Term U. Irs filing deadline S. Irs filing deadline Treasury Bills. Irs filing deadline Section III-B: Federal Home Loan Banks. Irs filing deadline Section III-C: Federal National Mortgage Association. Irs filing deadline Section III-D: Federal Farm Credit Banks. Irs filing deadline Section III-E: Federal Home Loan Mortgage Corporation. Irs filing deadline Section III-F: Federal Agricultural Mortgage Corporation. Irs filing deadline    Information that supplements Section III-A is available on the Internet at http://www. Irs filing deadline treasurydirect. Irs filing deadline gov/tdhome. Irs filing deadline htm. Irs filing deadline   The short-term obligations listed in this section are arranged by maturity date. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline Debt Instruments Not on the OID List The list of debt instruments discussed earlier does not contain the following items. Irs filing deadline U. Irs filing deadline S. Irs filing deadline savings bonds. Irs filing deadline Certificates of deposit and other face-amount certificates issued at a discount, including syndicated certificates of deposit. Irs filing deadline Obligations issued by tax-exempt organizations. Irs filing deadline OID debt instruments that matured or were entirely called by the issuer before the tables were posted on the IRS website. Irs filing deadline Mortgage-backed securities and mortgage participation certificates. Irs filing deadline Long-term OID debt instruments issued before May 28, 1969. Irs filing deadline Short-term obligations, other than the obligations listed in Section III. Irs filing deadline Debt instruments issued at a discount by states or their political subdivisions. Irs filing deadline REMIC regular interests and CDOs. Irs filing deadline Commercial paper and banker's acceptances issued at a discount. Irs filing deadline Obligations issued at a discount by individuals. Irs filing deadline Foreign obligations not traded in the United States and obligations not issued in the United States. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline See Backup Withholding, later. Irs filing deadline 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. Irs filing deadline 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). Irs filing deadline Electronic payee statements. Irs filing deadline   You can issue Form 1099-OID electronically with the consent of the recipient. Irs filing deadline More information. Irs filing deadline   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. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline If you sell the obligation for the owner before maturity, you must file Form 1099-B to reflect the gross proceeds to the seller. Irs filing deadline Do not report the accrued discount to the date of sale on either Form 1099-INT or Form 1099-OID. Irs filing deadline 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. Irs filing deadline A special rule is used to determine the original issue price for information reporting on U. Irs filing deadline S. Irs filing deadline Treasury bills (T-bills) listed in Section III-A. Irs filing deadline 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. Irs filing deadline This noncompetitive discount price is the issue price (expressed as a percent of principal) shown in Section III-A. Irs filing deadline 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. Irs filing deadline Example 1. Irs filing deadline There are 13-week and 26-week T-bills maturing on the same date as the T-bill being redeemed. Irs filing deadline The price actually paid by the owner cannot be established by owner or middleman records. Irs filing deadline 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. Irs filing deadline The interest you report on Form 1099-INT is the OID (per $1,000 of principal) shown in Section III-A for that obligation. Irs filing deadline 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. Irs filing deadline For this purpose, you can rely on Section I of the OID list to determine the following information. Irs filing deadline Whether a debt instrument has OID. Irs filing deadline The OID to be reported on the Form 1099-OID. Irs filing deadline In general, you must report OID on publicly offered, long-term debt instruments listed in Section I. Irs filing deadline You also can report OID on other long-term debt instruments. Irs filing deadline Form 1099-OID. Irs filing deadline   On Form 1099-OID for a calendar year show the following information. Irs filing deadline Box 1. Irs filing deadline The OID for the actual dates the owner held the debt instruments during a calendar year. Irs filing deadline To determine this amount, see Figuring OID, next. Irs filing deadline Box 2. Irs filing deadline The qualified stated interest paid or credited during the calendar year. Irs filing deadline Interest reported here is not reported on Form 1099-INT. Irs filing deadline The qualified stated interest on Treasury inflation-protected securities may be reported on Form 1099-INT in box 3 instead. Irs filing deadline Box 3. Irs filing deadline Any interest or principal forfeited because of an early withdrawal that the owner can deduct from gross income. Irs filing deadline Do not reduce the amounts in boxes 1 and 2 by the forfeiture. Irs filing deadline Box 4. Irs filing deadline Any backup withholding for this debt instrument. Irs filing deadline Box 7. Irs filing deadline The CUSIP number, if any. Irs filing deadline 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. Irs filing deadline 50 2006). Irs filing deadline If the issuer of the debt instrument is other than the payer, show the name of the issuer in this box. Irs filing deadline Box 8. Irs filing deadline The OID on a U. Irs filing deadline S. Irs filing deadline Treasury obligation for the part of the year the owner held the debt instrument. Irs filing deadline Box 9. Irs filing deadline Investment expenses passed on to holders of a single-class REMIC. Irs filing deadline Boxes 10-12. Irs filing deadline Use to report any state income tax withheld for this debt instrument. Irs filing deadline Figuring OID. Irs filing deadline   You can determine the OID on a long-term debt instrument by using either of the following. Irs filing deadline Section I of the OID list. Irs filing deadline The income tax regulations. Irs filing deadline Using Section I. Irs filing deadline   If the owner held the debt instrument for the entire calendar year, report the OID shown in Section I for the calendar year. Irs filing deadline 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. Irs filing deadline For example, if the debt instrument's stated redemption price at maturity is $500, report one-half the listed OID. Irs filing deadline   If the owner held the debt instrument for less than the entire calendar year, figure the OID to report as follows. Irs filing deadline Look up the daily OID for the first accrual period in the calendar year during which the owner held the debt instrument. Irs filing deadline Multiply the daily OID by the number of days the owner held the debt instrument during that accrual period. Irs filing deadline Repeat steps (1) and (2) for any remaining accrual periods for the year during which the owner held the debt instrument. Irs filing deadline Add the results in steps (2) and (3) to determine the owner's OID per $1,000 of stated redemption price at maturity. Irs filing deadline If necessary, adjust the OID in (4) to reflect the debt instrument's stated redemption price at maturity. Irs filing deadline Report the result on Form 1099-OID in box 1. Irs filing deadline Using the income tax regulations. Irs filing deadline   Instead of using Section I to figure OID, you can use the regulations under sections 1272 through 1275 of the Internal Revenue Code. Irs filing deadline 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. Irs filing deadline (If you use Section I-B, the OID is figured using 6-month accrual periods. Irs filing deadline )   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. Irs filing deadline 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. Irs filing deadline You must file an information return showing the reportable interest and OID, if any, on the CD. Irs filing deadline These rules apply whether or not you sold the CD to the owner. Irs filing deadline Report OID on a CD in the same way as OID on other debt instruments. Irs filing deadline See Short-Term Obligations Redeemed at Maturity and Long-Term Debt Instruments, earlier. Irs filing deadline 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. Irs filing deadline However, do not report the interest if either of the following apply. Irs filing deadline You hold the bond as a nominee for the true owner. Irs filing deadline The payee is a foreign person. Irs filing deadline See Payments to foreign person under Backup Withholding, later. Irs filing deadline 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. Irs filing deadline The coupon may have been “stripped” (separated) from the bond and separately purchased. Irs filing deadline 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. Irs filing deadline 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%. Irs filing deadline The backup withholding is deducted at the time a cash payment is made. Irs filing deadline See Pub. Irs filing deadline 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), for more information. Irs filing deadline Backup withholding generally applies in the following situations. Irs filing deadline The payee does not give you a taxpayer identification number (TIN). Irs filing deadline The IRS notifies you that the payee gave an incorrect TIN. Irs filing deadline The IRS notifies you that the payee is subject to backup withholding due to payee underreporting. Irs filing deadline 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. Irs filing deadline However, for short-term discount obligations (other than government obligations), bearer bonds and coupons, and U. Irs filing deadline S. Irs filing deadline 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. Irs filing deadline Short-term obligations. Irs filing deadline   Backup withholding applies to OID on a short-term obligation only when the OID is paid at maturity. Irs filing deadline However, backup withholding applies to any interest payable before maturity when the interest is paid or credited. Irs filing deadline   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. Irs filing deadline 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. Irs filing deadline If the purchase price of a listed obligation is not established or is disregarded, you must use the issue price shown in Section III. Irs filing deadline Long-term obligations. Irs filing deadline   If no cash payments are made on a long-term obligation before maturity, backup withholding applies only at maturity. Irs filing deadline The amount subject to backup withholding is the OID includible in the owner's gross income for the calendar year when the obligation matures. Irs filing deadline The amount to be withheld is limited to the cash paid. Irs filing deadline Registered long-term obligations with cash payments. Irs filing deadline   If a registered long-term obligation has cash payments before maturity, backup withholding applies when a cash payment is made. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline For any payment, the required withholding is limited to the cash paid. Irs filing deadline Payee not the original owner. Irs filing deadline   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). Irs filing deadline The amount subject to backup withholding at maturity of a listed obligation must be determined using the issue price shown in Section I. Irs filing deadline Bearer long-term obligations with cash payments. Irs filing deadline   If a bearer long-term obligation has cash payments before maturity, backup withholding applies when the cash payments are made. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline The required withholding at maturity is limited to the cash paid. Irs filing deadline Sales and redemptions. Irs filing deadline   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. Irs filing deadline Backup withholding applies in the following situations. Irs filing deadline The payee does not give you a TIN. Irs filing deadline The IRS notifies you that the payee gave an incorrect TIN. Irs filing deadline 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. Irs filing deadline Payments outside the United States to U. Irs filing deadline S. Irs filing deadline person. Irs filing deadline   The requirements for backup withholding and information reporting apply to payments of OID and interest made outside the United States to a U. Irs filing deadline S. Irs filing deadline 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. Irs filing deadline S. Irs filing deadline trade or business. Irs filing deadline Payments to foreign person. Irs filing deadline   The following discussions explain the rules for backup withholding and information reporting on payments to foreign persons. Irs filing deadline U. Irs filing deadline S. Irs filing deadline -source amount. Irs filing deadline   Backup withholding and information reporting are not required for payments of U. Irs filing deadline S. Irs filing deadline -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. Irs filing deadline A U. Irs filing deadline S. Irs filing deadline resident is not a foreign person. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline S. Irs filing deadline person. Irs filing deadline   For information about the 28% withholding tax that may apply to payments of U. Irs filing deadline S. Irs filing deadline -source OID or interest to foreign persons, see Publication 515. Irs filing deadline Foreign-source amount. Irs filing deadline   Backup withholding and information reporting are not required for payments of foreign-source OID and interest made outside the United States. Irs filing deadline 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. Irs filing deadline More information. Irs filing deadline   For more information about backup withholding and information reporting on foreign-source amounts or payments to foreign persons, see Regulations section 1. Irs filing deadline 6049-5. Irs filing deadline Information for Owners of OID Debt Instruments This section is for persons who prepare their own tax returns. Irs filing deadline It discusses the income tax rules for figuring and reporting OID on long-term debt instruments. Irs filing deadline 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. Irs filing deadline However, the information provided does not cover every situation. Irs filing deadline More information can be found in the regulations under sections 1271 through 1275 of the Internal Revenue Code. Irs filing deadline Including OID in income. Irs filing deadline   Generally, you include OID in income as it accrues each year, whether or not you receive any payments from the debt instrument issuer. Irs filing deadline Exceptions. Irs filing deadline   The rules for including OID in income as it accrues generally do not apply to the following debt instruments. Irs filing deadline U. Irs filing deadline S. Irs filing deadline savings bonds. Irs filing deadline Tax-exempt obligations. Irs filing deadline (However, see Tax-Exempt Bonds and Coupons, later. Irs filing deadline ) Obligations issued by individuals before March 2, 1984. Irs filing deadline Loans of $10,000 or less between individuals who are not in the business of lending money. Irs filing deadline (The dollar limit includes outstanding prior loans by the lender to the borrower. Irs filing deadline ) This exception does not apply if a principal purpose of the loan is to avoid any federal tax. Irs filing deadline   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. Irs filing deadline Publication 550 also discusses rules for holders of REMIC interests and CDOs. Irs filing deadline De minimis rule. Irs filing deadline   You can treat OID as zero if the total OID on a debt instrument is less than one-fourth of 1% (. Irs filing deadline 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. Irs filing deadline Debt instruments with de minimis OID are not listed in this publication. Irs filing deadline 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. Irs filing deadline Also, the de minimis rules generally do not apply to tax-exempt obligations. Irs filing deadline Example 2. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline Under the de minimis rule, you can treat the OID as zero because the $20 discount is less than $25. Irs filing deadline Example 3. Irs filing deadline Assume the same facts as Example 2, except the debt instrument was issued at $950. Irs filing deadline You must report part of the $50 OID each year because it is more than $25. Irs filing deadline Choice to report all interest as OID. Irs filing deadline   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. Irs filing deadline See Constant yield method under Debt Instruments Issued After 1984, later, for more information. Irs filing deadline   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. Irs filing deadline For more information, see Regulations section 1. Irs filing deadline 1272-3. Irs filing deadline Purchase after date of original issue. Irs filing deadline   A debt instrument you purchased after the date of original issue may have premium, acquisition premium, or market discount. Irs filing deadline If so, the OID reported to you on Form 1099-OID may have to be adjusted. Irs filing deadline For more information, see Showing an OID adjustment under How To Report OID, later. Irs filing deadline The following rules generally do not apply to contingent payment debt instruments. Irs filing deadline Adjustment for premium. Irs filing deadline   If your debt instrument (other than an inflation-indexed debt instrument) has premium, do not report any OID as ordinary income. Irs filing deadline Your adjustment is the total OID shown on your Form 1099-OID. Irs filing deadline Adjustment for acquisition premium. Irs filing deadline   If your debt instrument has acquisition premium, reduce the OID you report. Irs filing deadline 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. Irs filing deadline Adjustment for market discount. Irs filing deadline   If your debt instrument has market discount that you choose to include in income currently, increase the OID you report. Irs filing deadline Your adjustment is the accrued market discount for the year. Irs filing deadline 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. Irs filing deadline If you choose to use the constant yield method to figure accrued market discount, also see Figuring OID on Long-Term Debt Instruments, later. Irs filing deadline The constant yield method of figuring accrued OID, explained in those discussions under Constant yield method, is also used to figure accrued market discount. Irs filing deadline For more information concerning premium or market discount on an inflation-indexed debt instrument, see Regulations section 1. Irs filing deadline 1275-7. Irs filing deadline Sale, exchange, or redemption. Irs filing deadline   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. Irs filing deadline If you sold the debt instrument through a broker, you should receive Form 1099-B or an equivalent statement from the broker. Irs filing deadline Use the Form 1099-B or other statement and your brokerage statements to complete Form 8949, and Schedule D (Form 1040). Irs filing deadline   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. Irs filing deadline Your basis, generally, is your cost increased by the OID you have included in income each year you held it. Irs filing deadline 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. Irs filing deadline   See chapter 4 of Publication 550 for more information about the tax treatment of the sale or redemption of discounted debt instruments. Irs filing deadline Example 4. Irs filing deadline Larry, a calendar year taxpayer, bought a corporate debt instrument at original issue for $86,235. Irs filing deadline 00 on November 1 of Year 1. Irs filing deadline The 15-year debt instrument matures on October 31 of Year 16 at a stated redemption price of $100,000. Irs filing deadline The debt instrument provides for semiannual payments of interest at 10%. Irs filing deadline Assume the debt instrument is a capital asset in Larry's hands. Irs filing deadline The debt instrument has $13,765. Irs filing deadline 00 of OID ($100,000 stated redemption price at maturity minus $86,235. Irs filing deadline 00 issue price). Irs filing deadline Larry sold the debt instrument for $90,000 on November 1 of Year 4. Irs filing deadline Including the OID he will report for the period he held the debt instrument in Year 4, Larry has included $4,556. Irs filing deadline 00 of OID in income and has increased his basis by that amount to $90,791. Irs filing deadline 00. Irs filing deadline Larry has realized a loss of $791. Irs filing deadline 00. Irs filing deadline All of Larry's loss is capital loss. Irs filing deadline 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. Irs filing deadline Form 1099-OID shows all OID income in box 1 except OID on a U. Irs filing deadline S. Irs filing deadline Treasury obligation, which is shown in box 8. Irs filing deadline It also shows, in box 2, any qualified stated interest you must include in income. Irs filing deadline (However, any qualified stated interest on Treasury inflation-protected securities can be reported on Form 1099-INT in box 3. Irs filing deadline ) A copy of Form 1099-OID will be sent to the IRS. Irs filing deadline Do not attach your copy to your tax return. Irs filing deadline Keep it for your records. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline Form 1099-OID not received. Irs filing deadline   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. Irs filing deadline Refiguring OID. Irs filing deadline   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. Irs filing deadline You bought the debt instrument at a premium or at an acquisition premium. Irs filing deadline The debt instrument is a stripped bond or coupon (including zero coupon bonds backed by U. Irs filing deadline S. Irs filing deadline Treasury securities). Irs filing deadline The debt instrument is a contingent payment or inflation-indexed debt instrument. Irs filing deadline See the discussions under Figuring OID on Long-Term Debt Instruments or Figuring OID on Stripped Bonds and Coupons, later, for the specific computations. Irs filing deadline Refiguring interest. Irs filing deadline   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. Irs filing deadline Nominee. Irs filing deadline   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. Irs filing deadline ” You must file another Form 1099-OID for each actual owner, showing the OID for the owner. Irs filing deadline Show the owner of the debt instrument as the “recipient” and you as the “payer. Irs filing deadline ”   Complete Form 1099-OID and Form 1096 and file the forms with the Internal Revenue Service Center for your area. Irs filing deadline You must also give a copy of the Form 1099-OID to the actual owner. Irs filing deadline However, you are not required to file a nominee return to show amounts belonging to your spouse. Irs filing deadline See the Form 1099 instructions for more information. Irs filing deadline   When preparing your tax return, follow the instructions under Showing an OID adjustment in the next discussion. Irs filing deadline 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. Irs filing deadline Form 1040 or Form 1040A required. Irs filing deadline   You must use Form 1040 or Form 1040A (you cannot use Form 1040EZ) under either of the following conditions. Irs filing deadline You received a Form 1099-OID as a nominee for the actual owner. Irs filing deadline Your total interest and OID income for the year was more than $1,500. Irs filing deadline Form 1040 required. Irs filing deadline   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. Irs filing deadline 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. Irs filing deadline Also, you must use Form 1040 if you were charged an early withdrawal penalty. Irs filing deadline Where to report. Irs filing deadline   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. Irs filing deadline Include all OID and periodic interest shown on any Form 1099-OID, boxes 1, 2, and 8, you received for the tax year. Irs filing deadline Also include any other OID and interest income for which you did not receive a Form 1099. Irs filing deadline Showing an OID adjustment. Irs filing deadline   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. Irs filing deadline   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. Irs filing deadline If the OID, as adjusted, is less than the amount shown on Form 1099-OID, show the adjustment as follows. Irs filing deadline Under your last entry on line 1, subtotal all interest and OID income listed on line 1. Irs filing deadline Below the subtotal, write “Nominee Distribution” or “OID Adjustment” and show the OID you are not required to report. Irs filing deadline Subtract that OID from the subtotal and enter the result on line 2. Irs filing deadline If the OID, as adjusted, is more than the amount shown on Form 1099-OID, show the adjustment as follows. Irs filing deadline Under your last entry on line 1, subtotal all interest and OID income listed on line 1. Irs filing deadline Below the subtotal, write “OID Adjustment” and show the additional OID. Irs filing deadline Add that OID to the subtotal and enter the result on line 2. Irs filing deadline 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. Irs filing deadline It also may depend on the type of the debt instrument. Irs filing deadline There are different rules for each of the following debt instruments. Irs filing deadline Corporate debt instruments issued after 1954 and before May 28, 1969, and government debt instruments issued after 1954 and before July 2, 1982. Irs filing deadline Corporate debt instruments issued after May 27, 1969, and before July 2, 1982. Irs filing deadline Debt instruments issued after July 1, 1982, and before 1985. Irs filing deadline Debt instruments issued after 1984 (other than debt instruments described in (5) and (6)). Irs filing deadline Contingent payment debt instruments issued after August 12, 1996. Irs filing deadline Inflation-indexed debt instruments (including Treasury inflation-protected securities) issued after January 5, 1997. Irs filing deadline Zero coupon bonds. Irs filing deadline   The rules for figuring OID on zero coupon bonds backed by U. Irs filing deadline S. Irs filing deadline Treasury securities are discussed under Figuring OID on Stripped Bonds and Coupons, later. Irs filing deadline 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. Irs filing deadline The OID, which is taxed as ordinary income, generally equals the following amount. Irs filing deadline   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. Irs filing deadline If there is a loss on the sale of the debt instrument, the entire loss is a capital loss and no OID is reported. Irs filing deadline 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. Irs filing deadline For information about showing the correct OID on your tax return, see the discussion under How To Report OID, earlier. Irs filing deadline Your basis in the debt instrument is increased by the OID you include in income. Irs filing deadline Form 1099-OID. Irs filing deadline   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. Irs filing deadline However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Irs filing deadline See Reduction for acquisition premium, later. Irs filing deadline 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. Irs filing deadline irs. Irs filing deadline gov/pub1212 by clicking the link under Recent Developments. Irs filing deadline Form 1099-OID not received. Irs filing deadline    The OID listed is for each $1,000 of redemption price. Irs filing deadline You must adjust the listed amount if your debt instrument has a different principal amount. Irs filing deadline For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Irs filing deadline   If you held the debt instrument the entire year, use the OID shown in Section I-A for a calendar year. Irs filing deadline (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. Irs filing deadline ) If you did not hold the debt instrument the entire year, figure your OID using the following method. Irs filing deadline Divide the OID shown by 12. Irs filing deadline 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. Irs filing deadline This is the OID to include in income unless you paid an acquisition premium. Irs filing deadline The reduction for acquisition premium is discussed next. Irs filing deadline Reduction for acquisition premium. Irs filing deadline   If you bought the debt instrument at an acquisition premium, figure the OID to include in income as follows. Irs filing deadline 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. Irs filing deadline This is the monthly OID. Irs filing deadline Subtract from your cost the issue price and the accumulated OID from the date of issue to the date of purchase. Irs filing deadline (If the result is zero or less, stop here. Irs filing deadline You did not pay an acquisition premium. Irs filing deadline ) 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. Irs filing deadline Subtract the amount figured in (3) from the amount figured in (1). Irs filing deadline This is the OID to include in income for each month you hold the debt instrument during the year. Irs filing deadline Transfers during the month. Irs filing deadline   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. Irs filing deadline Your holding period for this purpose begins the day you acquire the debt instrument and ends the day before you dispose of it. Irs filing deadline 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. Irs filing deadline For information about showing the correct OID on your tax return, see How To Report OID, earlier. Irs filing deadline Form 1099-OID. Irs filing deadline   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. Irs filing deadline However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Irs filing deadline See Constant yield method and the discussions on acquisition premium that follow, later. Irs filing deadline 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. Irs filing deadline irs. Irs filing deadline gov/pub1212 by clicking the link under Recent Developments. Irs filing deadline Form 1099-OID not received. Irs filing deadline    The OID listed is for each $1,000 of redemption price. Irs filing deadline You must adjust the listed amount if your debt instrument has a different principal amount. Irs filing deadline For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Irs filing deadline   If you held the debt instrument the entire year, use the OID shown in Section I-A. Irs filing deadline (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. Irs filing deadline ) If you did not hold the debt instrument the entire year, figure your OID using either of the following methods. Irs filing deadline Method 1. Irs filing deadline    Divide the total OID for a calendar year by 365 (366 for leap years). Irs filing deadline Multiply the result in (1) by the number of days you held the debt instrument during that particular year. Irs filing deadline  This computation is an approximation and may result in a slightly higher OID than Method 2. Irs filing deadline Method 2. Irs filing deadline    Look up the daily OID for the first accrual period you held the debt instrument during a calendar year. Irs filing deadline (See Accrual period under Constant yield method, next. Irs filing deadline ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. Irs filing deadline If you held the debt instrument for part of both accrual periods, repeat (1) and (2) for the second accrual period. Irs filing deadline Add the results of (2) and (3). Irs filing deadline This is the OID to include in income, unless you paid an acquisition premium. Irs filing deadline (The reduction for acquisition premium is discussed later. Irs filing deadline ) Constant yield method. Irs filing deadline   This discussion shows how to figure OID on debt instruments issued after July 1, 1982, and before 1985, using a constant yield method. Irs filing deadline OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. Irs filing deadline   Figure the OID allocable to any accrual period as follows. Irs filing deadline Multiply the adjusted issue price at the beginning of the accrual period by the debt instrument's yield to maturity. Irs filing deadline Subtract from the result in (1) any qualified stated interest allocable to the accrual period. Irs filing deadline Accrual period. Irs filing deadline   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. Irs filing deadline Your tax year will usually include parts of two accrual periods. Irs filing deadline Daily OID. Irs filing deadline   The OID for any accrual period is allocated equally to each day in the accrual period. Irs filing deadline You must include in income the sum of the OID amounts for each day you hold the debt instrument during the year. Irs filing deadline If your tax year includes parts of two or more accrual periods, you must include the proper daily OID amounts for each accrual period. Irs filing deadline Figuring daily OID. Irs filing deadline   The daily OID for the initial accrual period is figured using the following formula. Irs filing deadline   (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. Irs filing deadline Reduction for acquisition premium on debt instruments purchased before July 19, 1984. Irs filing deadline   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. Irs filing deadline 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. Irs filing deadline Reduction for acquisition premium on debt instruments purchased after July 18, 1984. Irs filing deadline   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. Irs filing deadline However, the method of figuring the daily acquisition premium is different from the method described in the preceding discussion. Irs filing deadline To figure the daily acquisition premium under this method, multiply the daily OID by the following fraction. Irs filing deadline The numerator is the acquisition premium. Irs filing deadline The denominator is the total OID remaining for the debt instrument after your purchase date. Irs filing deadline Section I-A is available at www. Irs filing deadline irs. Irs filing deadline gov/pub1212 and clicking the link under Recent Developments. Irs filing deadline Using Section I-A to figure accumulated OID. Irs filing deadline   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. Irs filing deadline The amount from the “Total OID to January 1, YYYY” column for your debt instrument. Irs filing deadline The OID from January 1 of a calendar year to the date of purchase, figured as follows. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline Add the amounts figured in (2a) and (2b). Irs filing deadline 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. Irs filing deadline You must include the OID in gross income whether or not you hold the debt instrument as a capital asset. Irs filing deadline Your basis in the debt instrument is increased by the OID you include in income. Irs filing deadline For information about showing the correct OID on your tax return, see How To Report OID, earlier. Irs filing deadline Form 1099-OID. Irs filing deadline   You should receive a Form 1099-OID showing OID for the part of a calendar year you held the debt instrument. Irs filing deadline However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Irs filing deadline See Constant yield method and Reduction for acquisition premium, later. Irs filing deadline   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. Irs filing deadline See Contingent Payment Debt Instruments or Inflation-Indexed Debt Instruments, later. Irs filing deadline 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. Irs filing deadline irs. Irs filing deadline gov/pub1212 by clicking the link under Recent Developments. Irs filing deadline Form 1099-OID not received. Irs filing deadline   The OID listed is for each $1,000 of redemption price. Irs filing deadline You must adjust the listed amount if your debt instrument has a different principal amount. Irs filing deadline For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Irs filing deadline   Use the OID shown in Section I-B for a calendar year if you held the debt instrument the entire year. Irs filing deadline (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. Irs filing deadline ) If you did not hold the debt instrument the entire year, figure your OID as follows. Irs filing deadline Look up the daily OID for the first accrual period in which you held the debt instrument during a calendar year. Irs filing deadline (See Accrual period under Constant yield method, later. Irs filing deadline ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. Irs filing deadline Repeat (1) and (2) for any remaining accrual periods in which you held the debt instrument. Irs filing deadline Add the results of (2) and (3). Irs filing deadline This is the OID to include in income for that year, unless you paid an acquisition premium. Irs filing deadline (The reduction for acquisition premium is discussed later. Irs filing deadline ) Tax-exempt bond. Irs filing deadline   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. Irs filing deadline You need to make this adjustment to determine if you have a gain or loss on a later disposition of the bond. Irs filing deadline In general, use the rules that follow to determine your OID. Irs filing deadline Constant yield method. Irs filing deadline   This discussion shows how to figure OID on debt instruments issued after 1984 using a constant yield method. Irs filing deadline (The special rules that apply to contingent payment debt instruments and inflation-indexed debt instruments are explained later. Irs filing deadline ) OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. Irs filing deadline   Figure the OID allocable to any accrual period as follows. Irs filing deadline Multiply the adjusted issue price at the beginning of the accrual period by a fraction. Irs filing deadline The numerator of the fraction is the debt instrument's yield to maturity and the denominator is the number of accrual periods per year. Irs filing deadline The yield must be stated appropriately taking into account the length of the particular accrual period. Irs filing deadline Subtract from the result in (1) any qualified stated interest allocable to the accrual period. Irs filing deadline Accrual period. Irs filing deadline   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. Irs filing deadline For example, a debt instrument maturing on March 31 has accrual periods that end on September 30 and March 31 of each calendar year. Irs filing deadline Any short period is included as the first accrual period. Irs filing deadline   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. Irs filing deadline However, the OID listed for these debt instruments in Section I-B has been figured using 6-month accrual periods. Irs filing deadline Daily OID. Irs filing deadline   The OID for any accrual period is allocated equally to each day in the accrual period. Irs filing deadline Figure the amount to include in income by adding the OID for each day you hold the debt instrument during the year. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline Figuring daily OID. Irs filing deadline   The daily OID for the initial accrual period is figured using the following formula. Irs filing deadline   (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. Irs filing deadline Example 5. Irs filing deadline On January 1 of Year 1, you bought a 15-year, 10% debt instrument of A Corporation at original issue for $86,235. Irs filing deadline 17. Irs filing deadline According to the prospectus, the debt instrument matures on December 31 of Year 15 at a stated redemption price of $100,000. Irs filing deadline The yield to maturity is 12%, compounded semiannually. Irs filing deadline The debt instrument provides for qualified stated interest payments of $5,000 on June 30 and December 31 of each calendar year. Irs filing deadline The accrual periods are the 6-month periods ending on each of these dates. Irs filing deadline The number of days for the first accrual period (January 1 through June 30) is 181 days (182 for leap years). Irs filing deadline The daily OID for the first accrual period is figured as follows. Irs filing deadline   ($86,235. Irs filing deadline 17 x . Irs filing deadline 12/2) – $5,000     181 days     = $174. Irs filing deadline 11020 = $. Irs filing deadline 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. Irs filing deadline 17 + $174. Irs filing deadline 11), or $86,409. Irs filing deadline 28. Irs filing deadline The number of days for the second accrual period (July 1 through December 31) is 184 days. Irs filing deadline The daily OID for the second accrual period is figured as follows. Irs filing deadline   ($86,409. Irs filing deadline 28 x . Irs filing deadline 12/2) – $5,000     184 days     = $184. Irs filing deadline 55681 = $1. Irs filing deadline 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, $174. Irs filing deadline 11 ($. Irs filing deadline 95665 × 182 days) plus $184. Irs filing deadline 56 ($1. Irs filing deadline 00303 × 184 days), or $358. Irs filing deadline 67. Irs filing deadline Add the OID to the $10,000 interest you report on your income tax return for Year 1. Irs filing deadline Example 6. Irs filing deadline 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. Irs filing deadline Also, the interest payment dates are October 31 and April 30 of each calendar year. Irs filing deadline The accrual periods are the 6-month periods ending on each of these dates. Irs filing deadline The number of days for the first accrual period (May 1 through October 31) is 184 days. Irs filing deadline The daily OID for the first accrual period is figured as follows. Irs filing deadline   ($86,235. Irs filing deadline 17 x . Irs filing deadline 12/2) – $5,000     184 days     = $174. Irs filing deadline 11020 = $. Irs filing deadline 94625   184           The number of days for the second accrual period (November 1 through April 30) is 181 days (182 for leap years). Irs filing deadline The daily OID for the second accrual period is figured as follows. Irs filing deadline   ($86,409. Irs filing deadline 28 x . Irs filing deadline 12/2) – $5,000     181 days     = $184. Irs filing deadline 55681 = $1. Irs filing deadline 01965   181 If you hold the debt instrument through the end of Year 1, you must include $236. Irs filing deadline 31 of OID in income. Irs filing deadline This is $174. Irs filing deadline 11 ($. Irs filing deadline 94625 × 184 days) for the period May 1 through October 31 plus $62. Irs filing deadline 20 ($1. Irs filing deadline 01965 × 61 days) for the period November 1 through December 31. Irs filing deadline The OID is added to the $5,000 interest income paid on October 31 of Year 1. Irs filing deadline Your basis in the debt instrument is increased by the OID you include in income. Irs filing deadline On January 1 of Year 2, your basis in the A Corporation debt instrument is $86,471. Irs filing deadline 48 ($86,235. Irs filing deadline 17 + $236. Irs filing deadline 31). Irs filing deadline Short first accrual period. Irs filing deadline   You may have to make adjustments if a debt instrument has a short first accrual period. Irs filing deadline 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. Irs filing deadline (The remaining accrual periods begin on May 1 and November 1. Irs filing deadline ) For this short period, figure the daily OID as described earlier, but adjust the yield for the length of the short accrual period. Irs filing deadline You may use any reasonable compounding method in determining OID for a short period. Irs filing deadline Examples of reasonable compounding methods include continuous compounding and monthly compounding (that is, simple interest within a month). Irs filing deadline Consult your tax advisor for more information about making this computation. Irs filing deadline   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. Irs filing deadline Reduction for acquisition premium. Irs filing deadline   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. Irs filing deadline To figure the daily acquisition premium, multiply the daily OID by the following fraction. Irs filing deadline The numerator is the acquisition premium. Irs filing deadline The denominator is the total OID remaining for the debt instrument after your purchase date. Irs filing deadline Example 7. Irs filing deadline 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. Irs filing deadline The adjusted issue price on November 1 of Year 1 is $86,409. Irs filing deadline 28 ($86,235. Irs filing deadline 17 + $174. Irs filing deadline 11). Irs filing deadline In this case, you paid an acquisition premium of $590. Irs filing deadline 72 ($87,000 − $86,409. Irs filing deadline 28). Irs filing deadline The daily OID for the accrual period November 1 through April 30, reduced for the acquisition premium, is figured as follows. Irs filing deadline 1) Daily OID on date of purchase (2nd accrual period) $1. Irs filing deadline 01965*  2)  Acquisition premium $590. Irs filing deadline 72    3)  Total OID remaining after purchase date ($13,764. Irs filing deadline 83 − $174. Irs filing deadline 11) 13,590. Irs filing deadline 72   4) Line 2 ÷ line 3 . Irs filing deadline 04346  5)  Line 1 × line 4 . Irs filing deadline 04432  6)  Daily OID reduced for the acquisition premium. Irs filing deadline Line 1 − line 5 $0. Irs filing deadline 97533  * As shown in Example 6. Irs filing deadline The total OID to include in income for Year 1 is $59. Irs filing deadline 50 ($. Irs filing deadline 97533 × 61 days). Irs filing deadline 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. Irs filing deadline In general, a contingent payment debt instrument provides for one or more payments that are contingent as to timing or amount. Irs filing deadline If you hold a contingent payment bond, you must report OID as it accrues each year. Irs filing deadline 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. Irs filing deadline To figure OID accruals on contingent payment debt instruments, holders and issuers must use the noncontingent bond method. Irs filing deadline Noncontingent bond method. Irs filing deadline    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. Irs filing deadline In general, holders and issuers accrue OID on this projected payment schedule using the constant yield method that applies to fixed payment debt instruments. Irs filing deadline When a contingent payment differs from the projected fixed amount, the holders and issuers make adjustments to their OID accruals. Irs filing deadline If the actual contingent payment is larger than expected, both the issuer and the holder increase their OID accruals. Irs filing deadline If the actual contingent payment is smaller than expected, holders and issuers generally decrease their OID accruals. Irs filing deadline Form 1099-OID. Irs filing deadline   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. Irs filing deadline For example, the amount may not be correct if the contingent payment was different from the projected amount. Irs filing deadline If the amount in box 1 is not correct, you must figure the OID to report on your return under the following rules. Irs filing deadline For information on showing an OID adjustment on your tax return, see How To Report OID, earlier. Irs filing deadline Figuring OID. Irs filing deadline   To figure OID on a contingent payment debt instrument, you need to know the “comparable yield” and “projected payment schedule” of the debt instrument. Irs filing deadline The issuer must make these available to you. Irs filing deadline Comparable yield. Irs filing deadline   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. Irs filing deadline The comparable yield is determined as of the debt instrument's issue date. Irs filing deadline Projected payment schedule. Irs filing deadline   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. Irs filing deadline The projected payment schedule is created by the issuer as of the debt instrument's issue date. Irs filing deadline It is used to determine the issuer's and holder's interest accruals and adjustments. Irs filing deadline Steps for figuring OID. Irs filing deadline   Figure the OID on a contingent payment debt instrument in two steps. Irs filing deadline Figure the OID using the constant yield method (discussed earlier under Debt Instruments Issued After 1984 ) that applies to fixed payment debt instruments. Irs filing deadline Use the comparable yield as the yield to maturity. Irs filing deadline 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). Irs filing deadline Do not treat any amount payable as qualified stated interest. Irs filing deadline Adjust the OID in (1) to account for actual contingent payments. Irs filing deadline If the contingent payment is greater than the projected fixed amount, you have a positive adjustment. Irs filing deadline If the contingent payment is less than the projected fixed amount, you have a negative adjustment. Irs filing deadline Net positive adjustment. Irs filing deadline   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. Irs filing deadline Treat a net positive adjustment as additional OID for the tax year. Irs filing deadline Net negative adjustment. Irs filing deadline   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. Irs filing deadline Use a net negative adjustment to offset OID on the debt instrument for the tax year. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline 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. Irs filing deadline Basis adjustments. Irs filing deadline   In general, increase your basis in a contingent payment debt instrument by the OID included in income. Irs filing deadline Your basis, however, is not affected by any negative or positive adjustments. Irs filing deadline Decrease your basis by any noncontingent payment received and the projected contingent payment scheduled to be received. Irs filing deadline Treatment of gain or loss on sale or exchange. Irs filing deadline   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. Irs filing deadline 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. Irs filing deadline If the debt instrument is a capital asset, treat any loss that is more than your prior OID accruals as a capital loss. Irs filing deadline See Regulations section 1. Irs filing deadline 1275-4 for exceptions to these rules. Irs filing deadline Premium, acquisition premium, and market discount. Irs filing deadline   The rules for accruing premium, acquisition premium, and market discount do not apply to a contingent payment debt instrument. Irs filing deadline See Regulations section 1. Irs filing deadline 1275-4 to determine how to account for these items. Irs filing deadline Inflation-Indexed Debt Instruments This discussion shows how you figure OID on certain inflation-indexed debt instruments issued after January 5, 1997. Irs filing deadline An inflation-indexed debt instrument is generally a debt instrument on which the payments are adjusted for inflation and d