Publication 1212

(Rev. January 2020) Contents

Cat. No. 61273T Future Developments . . . . . . . . . . . . 1
Department

Guide to
of the What’s New .................. 1
Treasury
Internal Introduction . . . . . . . . . . . . . . . . . . 2
Revenue
Service Original Definitions . . . . . . . . . . . . . . . . . . . 2

Issue
Debt Instruments in the OID
Tables . . . . . . . . . . . . . . . . . . . 3

Discount (OID)
Debt Instruments Not in the OID
Tables . . . . . . . . . . . . . . . . . . . 3

Instruments Information for Brokers and Other

Middlemen . . . . . . . . . . . .
Short-Term Obligations
.... 4

Redeemed at Maturity . . . . . . . . 4
Long-Term Debt Instruments . . . . . . 4
Certificates of Deposit . . . . . . . . . . 5
Bearer Bonds and Coupons . . . . . . . 5
Backup Withholding . . . . . . . . . . . 5

Information for Owners of OID Debt

Instruments . . . . . . . . . . . .... 6
Form 1099-OID . . . . . . . . . . .... 7
How To Report OID . . . . . . . .... 7
Figuring OID on Long-Term
Debt Instruments . . . . . . . .... 7
Debt Instruments Issued
After July 1, 1982, and
Before 1985 . . . . . . . .... 8
Debt Instruments Issued
After 1984 . . . . . . . . .... 9
Contingent Payment Debt
Instruments . . . . . . . . . . 10
Inflation-Indexed Debt
Instruments . . . . . . . . . . 11
Figuring OID on Stripped Bonds
and Coupons . . . . . . . . . . . . 12
Form 1099-OID . . . . . . . . . . 12
Tax-Exempt Bonds and
Coupons . . . . . . . . . . . 12
Debt Instruments and
Coupons Purchased
After July 1, 1982, and
Before 1985 . . . . . . . . . . 13
Debt Instruments and
Coupons Purchased
After 1984 . . . . . . . . . . . 13

How To Get Tax Help . . . . . . . . . . . 14

Index . . . . . . . . . . . . . . . . . . . . . 17

Future Developments
For the latest information about developments
related to Pub. 1212, such as legislation
enacted after it was published, go to IRS.gov/
Pub1212.

Get forms and other information faster and easier at: What’s New
• IRS.gov (English) • IRS.gov/Korean (한국어)
Form 1040-SR. Form 1040-SR, U.S. Tax Re-
• IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский)
• IRS.gov/Chinese (中文) turn for Seniors, has been introduced for 2019.
• IRS.gov/Vietnamese (TiếngViệt)
You can use this form if you were born before

Jan 09, 2020

January 2, 1955. The Form 1040-SR generally Issuers should report errors in and 1099-B Proceeds From Broker and Barter
1099-B

mirrors Form 1040. For more information, see omissions from the list in writing at the Exchange Transactions
the Form 1040-SR, and instructions for Forms following address:
1040 and 1040-SR. 1099-INT Interest Income 1099-INT

IRS OID Publication Project

SE:W:CAR:MP:TFP 1099-OID Original Issue Discount 1099-OID

1111 Constitution Ave. NW, IR-6526

Photographs of Missing Washington, DC 20224 8281 Information Return for Publicly
8281

Offered Original Issue Discount

Children Instruments

The IRS is a proud partner with the National REMIC and CDO information reporting re- 8949 Sales and Other Dispositions of
Center for Missing & Exploited Children®
8949

quirements. Brokers and other middlemen Capital Assets

(NCMEC). Photographs of missing children must follow special information reporting re-
selected by the Center may appear in this quirements for real estate mortgage investment Schedule B (Form 1040 or 1040-SR) Schedule B (Form 1040 or 1040-SR)

publication on pages that would otherwise be conduit (REMIC) regular interests, and collater- Interest and Ordinary Dividends
blank. You can help bring these children home alized debt obligation (CDO) interests. The
by looking at the photographs and calling Schedule D (Form 1040 or 1040-SR)
rules are explained in Pub. 938.
Schedule D (Form 1040 or 1040-SR)

1-800-THE-LOST (1-800-843-5678) if you Capital Gains and Losses

Holders of interests in REMICs and CDOs
recognize a child. should see chapter 1 of Pub. 550 for informa- W-8 Instructions for the Requester of
tion on REMICs and CDOs.
W-8

Forms W-8BEN, W-8BEN-E,

Introduction W-8ECI, W-8EXP, and W-8IMY
Comments and suggestions. We welcome
This publication has two purposes. Its primary your comments about this publication and your See How To Get Tax Help at the end of this
purpose is to help brokers and other middlemen suggestions for future editions. publication for information about getting publi-
identify publicly offered original issue discount You can send us comments through cations and forms.
(OID) debt instruments they may hold as nomi- IRS.gov/FormComments. Or, you can write to:
nees for the true owners, so they can file Forms Internal Revenue Service, Tax Forms and Pub-
1099-OID or Forms 1099-INT, as required. The
other purpose of the publication is to help own-
lications, 1111 Constitution Ave. NW, IR-6526, Definitions
Washington, DC 20224.
ers of publicly offered OID debt instruments de- Although we can’t respond individually to
termine how much OID to report on their in- The following terms are used throughout this
each comment received, we do appreciate your publication. “Original issue discount” is defined
come tax returns. feedback and will consider your comments as
The tables of publicly offered OID debt in- first. The other terms are listed alphabetically.
we revise our tax forms, instructions, and publi-
struments (OID tables) are available at IRS.gov/ cations. We can’t answer tax questions sent to Original issue discount (OID). OID is a form
Pub1212, by clicking the link under Recent De- the above address. of interest. It is the excess of a debt instru-
velopments. An advance release of the annual
ment's stated redemption price at maturity over
tables is posted in the fall of each year, followed Tax questions. If you have a tax question
its issue price (acquisition price for a stripped
by the final release later the same year or early not answered by this publication or the How To
bond or coupon). Zero coupon bonds and debt
in the subsequent year. The information in the Get Tax Help section at the end of this publica-
instruments that pay no stated interest until ma-
OID tables comes from the issuers of the debt tion, go to the IRS Interactive Tax Assistant
turity are examples of debt instruments that
instruments and from financial publications and page at IRS.gov/Help/ITA where you can find
have OID.
is updated annually. (However, see Debt Instru- topics using the search feature or by viewing
ments Not in the OID Tables, later.) the categories listed.
Accrual period. An accrual period is an inter-
Brokers and other middlemen can rely on
Getting tax forms, instructions, and pub- val of time used to measure OID. The length of
the OID tables to determine for information re-
lications. Visit IRS.gov/Forms to download an accrual period can be 6 months, a year, or
porting purposes, whether a debt instrument
current and prior-year forms, instructions, and some other period no longer than 1 year, de-
was issued at a discount and the OID to be re-
publications. pending on when the debt instrument was is-
ported on information returns. However, be-
sued.
cause the information in the OID tables has Ordering tax forms, instructions, and
generally not been verified by the IRS as cor- publications. Go to IRS.gov/OrderForms to Acquisition premium. Acquisition premium is
rect, the following tax matters are subject to order current forms, instructions, and publica- the excess of a debt instrument’s adjusted ba-
change upon examination by the IRS. tions; call 800-829-3676 to order prior-year sis immediately after purchase, including pur-
• The OID reported by owners of a debt in- forms and instructions. Your order should arrive chase at original issue, over the debt instru-
strument on their income tax returns. within 10 business days. ment’s adjusted issue price at that time. A
• The issuer's classification of an instrument purchaser reduces any OID income by the ac-
as debt for federal income tax purposes.
• The adjusted basis of a debt instrument. Useful Items quisition premium, as discussed under Informa-
You may want to see: tion for Owners of OID Debt Instruments, later.
Instructions for issuers of OID debt instru- If the purchaser’s adjusted basis exceeds
ments. In general, issuers of publicly offered Publication the total of all amounts payable under the debt
OID debt instruments must file Form 8281 instrument (other than qualified stated interest)
within 30 days after the date of issuance, and, if 515 Withholding of Tax on Nonresident after the date of purchase, then the debt instru-
ment has premium instead of acquisition pre-
515

registered with the Securities and Exchange Aliens and Foreign Entities
Commission (SEC), within 30 days after regis- mium. See Premium, later.
550 Investment Income and Expenses
tration with the SEC. A separate Form 8281
550

Adjusted issue price. The adjusted issue

must be filed for each issuance or SEC registra- 938 Real Estate Mortgage Investment price of a debt instrument at the beginning of an
tion. For more information, see Form 8281 and
938

Conduits (REMICs) Reporting accrual period is used to figure the OID alloca-
its instructions. Information (And Other Collateralized ble to that period. In general, the adjusted issue
Debt Obligations (CDOs)). price at the beginning of the debt instrument's
first accrual period is its issue price. The adjus-
Form (and Instructions) ted issue price at the beginning of any subse-
quent accrual period is the sum of the issue
1096 Annual Summary and Transmittal of
price and all the OID includible in income before
1096

U.S. Information Returns

Page 2 Publication 1212 (January 2020)

that accrual period minus any payment previ- The obligations listed in Section II are ar-
ously made on the debt instrument, other than a
payment of qualified stated interest. Debt Instruments ranged by maturity date. The amounts listed are
the total OID for a calendar year per $1,000 of

Debt instrument. The term “debt instrument”

in the OID Tables redemption price.

means any instrument or contractual arrange- Section III. This section contains short-term
The OID tables, available at IRS.gov/Pub1212,
ment that constitutes indebtedness under gen- discount obligations.
can be used by brokers and other middlemen to
eral principles of federal income tax law (includ- • Section III-A: Short-Term U.S. Treasury
prepare information returns.
ing, for example, a bond, debenture, note, Bills.
certificate, or other evidence of indebtedness). If you own a debt instrument included • Section III-B: Federal Home Loan Banks.
It generally does not include an annuity con-
! in tables, you generally should not rely • Section III-C: Federal National Mortgage
tract. CAUTION on the information in the OID tables to Association.
determine (or compare) the OID to be reported • Section III-D: Federal Farm Credit Banks.
Issue price. For debt instruments listed in on your tax return, but you should use, as a • Section III-E: Federal Home Loan Mort-
Section I-A and Section I-B, the issue price gen- starting point, the information supplied to you gage Corporation.
erally is the initial offering price to the public (ex- on Form 1099-OID. The OID amounts listed are • Section III-F: Federal Agricultural Mortgage
cluding bond houses and brokers) at which a figured without reference to the price or date at Corporation.
substantial amount of these instruments was which you acquired the debt instrument. For in- Information that supplements Sec-
sold. formation about determining the OID to be re- tion III-A is available on the Internet at
ported on your tax return, see the instructions TreasuryDirect.gov/tdhome.htm.
Market discount. A debt instrument generally for figuring OID under Information for Owners of
is acquired with market discount if its stated re- OID Debt Instruments, later. The short-term obligations listed in this sec-
demption price at maturity is greater than its ba- tion are arranged by maturity date. For each ob-
sis immediately after its acquisition. In general, The following discussions explain what in- ligation, the list contains the CUSIP number,
a debt instrument is purchased in the secon- formation is contained in each section of the ta- maturity date, issue date, issue price (ex-
dary market at a market discount when the bles. pressed as a percent of principal), and discount
value of the debt instrument has decreased to be reported as interest for a calendar year
since the instrument’s issue date (for example, Section I. This section contains publicly of- per $1,000 of redemption price. Brokers and
because of an increase in interest rates). An fered, long-term debt instruments. other middlemen should rely on the issue price
OID debt instrument has market discount if your • Section I-A: Corporate Debt Instruments information in Section III only if they are unable
adjusted basis in the debt instrument immedi- Issued Before 1985. to determine the price actually paid by the
ately after you acquired it (usually its purchase • Section I-B: Corporate Debt Instruments owner.
price) was less than the debt instrument's issue Issued After 1984.
price plus the total OID that accrued before you • Section I-C: Inflation-Indexed Debt Instru-
acquired it. The market discount is the differ-
ence between the issue price plus accrued OID
ments. Debt Instruments
and your adjusted basis. For each publicly offered debt instrument in
Section I, the list contains the following informa-
Not in the OID Tables
Premium. A debt instrument is purchased at a tion.
The list of debt instruments discussed earlier
premium if its adjusted basis immediately after • The name of the issuer. does not contain the following items.
purchase is greater than the total of all amounts • The Committee on Uniform Security Identi- • U.S. savings bonds.
payable on the debt instrument after the pur- fication Procedures (CUSIP) number.
• Certificates of deposit and other
chase date, other than qualified stated interest. • The issue date. face-amount certificates issued at a dis-
The premium is the excess of the adjusted ba- • The maturity date. count, including syndicated certificates of
sis over the payable amounts. • The issue price expressed as a percent of deposit.
principal or of stated redemption price at
Premium generally will eliminate the future
maturity.
• Obligations issued by tax-exempt organi-
reporting of OID in income by the purchaser, as zations.
discussed under Information for Owners of OID • The annual stated or coupon interest rate. • OID debt instruments that matured or were
(This rate is shown as 0.00 if no annual in-
Debt Instruments, later. See Pub. 550 for more entirely called by the issuer before the ta-
terest payments are provided.)
information on the tax treatment of bond pre- bles were posted on the IRS website.
mium. • The YTM will be added to Section I-B for • Mortgage-backed securities and mortgage
bonds issued after December 31, 2006.
participation certificates.
Qualified stated interest. In general, qualified • The total OID accrued up to January 1 of a • Short-term obligations, other than the obli-
stated interest is stated interest that is uncondi- calendar year. (This information is not
gations listed in Section III.
available for every instrument.)
tionally payable in cash or property (other than • Debt instruments issued at a discount by
debt instruments of the issuer) at least annually • For long-term debt instruments issued af- states or their political subdivisions.
ter July 1, 1982, the daily OID for the ac-
over the term of the debt instrument at a single
crual periods falling in a calendar year and
• REMIC regular interests and CDOs.
fixed rate.
a subsequent year.
• Commercial paper and banker's acceptan-
ces issued at a discount.
Stated redemption price at maturity. A debt • The total OID per $1,000 of principal or • Obligations issued at a discount by individ-
instrument's stated redemption price at maturity maturity value for a calendar year and a
uals.
is the sum of all amounts (principal and interest) subsequent year.
• Foreign obligations not traded in the Uni-
payable on the debt instrument, other than ted States and obligations not issued in the
qualified stated interest. Section II. This section contains stripped cou-
United States.
pons and principal components of U.S. Treas-
Yield to maturity (YTM). In general, the YTM ury and Government-Sponsored Enterprise
is the discount rate that, when used in figuring debt instruments. These stripped components
the present value of all principal and interest are available through the Department of the
payments, produces an amount equal to the is- Treasury's Separate Trading of Registered In-
sue price of the debt instrument. The YTM is terest and Principal of Securities (STRIPS) pro-
generally shown on the face of the debt instru- gram and government-sponsored enterprises
ment or in the literature you receive from your such as the Resolution Funding Corporation.
broker. If you do not have this information, con- This section also includes debt instruments
sult your broker, tax advisor, or the issuer. backed by U.S. Treasury securities that repre-
sent ownership interests in those securities.

Publication 1212 (January 2020) Page 3

 issue price of the T-bill the noncompetitive dis- suer, the coupon rate, and the year of

Information for count price (expressed as a percent of princi-

pal) shown in Section III-A for a 26-week bill
maturity (for example, NYSE XYZ 12.50
2006). If the issuer of the debt instrument
Brokers and maturing on the same date as the T-bill re-
deemed. The interest you report on Form
is other than the payer, show the name of
the issuer in this box.
Other Middlemen 1099-INT is the OID (per $1,000 of principal) • Box 8. The OID on a U.S. Treasury obliga-
shown in Section III-A for that obligation. tion for the part of the year the owner held
The following discussions contain specific in- the debt instrument. You may report a net
amount of OID that reflects the offset of
structions for brokers and middlemen who hold Long-Term OID by the amount of acquisition premium
or redeem a debt instrument for the owner.
Debt Instruments amortization for the year. If you do so,
In general, you must file a Form 1099-INT or leave box 6 blank.
Form 1099-OID for the debt instrument if the in- If you hold a long-term OID debt instrument as a • Box 9. Investment expenses passed on to
terest or OID to be included in the owner's in- nominee for the true owner, you generally must holders of a single-class REMIC.
come for a calendar year totals $10 or more. file Form 1099-OID. For this purpose, you can Note. This amount is not deductible.
You must also file a Form 1099-INT or Form rely on Section I of the OID tables to determine • Box 10. For a taxable covered security ac-
1099-OID if you were required to deduct and the following information. quired at a premium, enter the amount of
withhold tax, even if the interest or OID is less • Whether a debt instrument has OID. bond premium amortization allocable to
than $10. See Backup Withholding, later. • The OID to be reported on the Form the interest paid during the tax year, unless
1099-OID. you were notified in writing that the holder
If you must file a Form 1099-INT or Form did not want to amortize bond premium un-
1099-OID, furnish a copy to the owner of the In general, you must report OID on publicly
der section 171. See Regulations sections
debt instrument by January 31 in the year it is offered, long-term debt instruments listed in
1.6045-1(n)(5) and 1.6049-9(b). If you are
due. File all your Forms 1099 with the IRS, ac- Section I. You can also report OID on other
required to report bond premium amortiza-
companied by Form 1096, by February 28 in long-term debt instruments.
tion and you reported a net amount of in-
the year they are due (March 31 if you file elec- terest in box 2, leave this box blank.
tronically). Form 1099-OID. Form 1099-OID for a calen-
dar year shows the following information. • Box 11. Use to report any tax-exempt OID.
• Box 1. The OID for the actual dates the • Boxes 12–14. Use to report any state in-
Electronic payee statements. You can issue come tax withheld for this debt instrument.
Form 1099-INT or Form 1099-OID electronically owner held the debt instruments during a
with the consent of the recipient. calendar year. To determine this amount,
Figuring OID. You can determine the OID on a
see Figuring OID next. You may report a
long-term debt instrument by using either of the
More information. For more information, in- net amount of OID that reflects the offset of
following.
cluding penalties for failure to file (or furnish) re- OID by the amount of acquisition premium
amortization for the year. If you do so,
• Section I of the OID tables.
quired information returns or statements, see
leave box 6 blank.
• The income tax regulations.
the current General Instructions for Certain In-
formation Returns. • Box 2. The qualified stated interest paid or Using Section I. If the owner held the debt
credited during the calendar year. Interest instrument for the entire calendar year, report
reported here is not reported on Form
Short-Term Obligations 1099-INT. The qualified stated interest on
the OID shown in Section I for the calendar
year. Because OID is listed for each $1,000 of
Redeemed at Maturity Treasury inflation-protected securities stated redemption price at maturity, you must
(TIPS) may be reported on Form 1099-INT adjust the listed amount to reflect the debt in-
If you redeem a short-term discount obligation in box 3 instead. strument's actual stated redemption price at
for the owner at maturity, you must report the • Box 3. Any interest or principal forfeited maturity. For example, if the debt instrument's
discount as interest on Form 1099-INT. because of an early withdrawal that the stated redemption price at maturity is $500, re-
owner can deduct from gross income. Do port one-half the listed OID.
To figure the discount, use the purchase not reduce the amounts in boxes 1 and 2 If the owner held the debt instrument for less
price shown on the owner's copy of the pur- by the forfeiture. than the entire calendar year, figure the OID to
chase confirmation receipt or similar record, or • Box 4. Any backup withholding for this report as follows.
the price shown in your transaction records. debt instrument.
• Box 5. For a covered security acquired 1. Look up the daily OID for the first accrual
If the owner's purchase price cannot be de- period in the calendar year during which
termined, figure the discount as if the owner with market discount, enter the amount of
market discount that accrued during the the owner held the debt instrument.
had purchased the obligation at its original is-
sue price. A special rule is used to determine period the holder owned the debt instru- 2. Multiply the daily OID by the number of
the original issue price for information reporting ment, provided the holder notified you of days the owner held the debt instrument
on U.S. Treasury bills (T-bills) listed in Sec- an election made under section 1278(b) to during that accrual period.
tion III-A. Under this rule, you treat as the origi- include market discount in income as it ac-
crued. Follow the instructions in Regula- 3. Repeat steps (1) and (2) for any remaining
nal issue price of the T-bill the noncompetitive accrual periods for the year during which
(weighted average of accepted auction bids) tions section 1.6045-1(n) to determine the
accruals of market discount. the owner held the debt instrument.
discount price for the longest-maturity T-bill ma-
turing on the same date as the T-bill being re- • Box 6. For a covered security acquired 4. Add the results in steps (2) and (3) to de-
deemed. This noncompetitive discount price is with acquisition premium, enter the amount termine the owner's OID per $1,000 of sta-
the issue price (expressed as a percent of prin- of acquisition premium amortization for the ted redemption price at maturity.
cipal) shown in Section III-A. period the holder owned the debt instru-
ment. If a net amount of OID is reported in 5. If necessary, adjust the OID in step (4) to
A similar rule is used to figure the discount box 1, box 8, or box 11, as applicable, reflect the debt instrument's stated re-
on short-term discount obligations issued by the leave this box blank. Follow the instruc- demption price at maturity.
organizations listed in Section III-B through tions in Regulations section 1.6045-1(n) to Report the result on Form 1099-OID in box 1.
Section III-F. determine the amortization of acquisition
premium. Using the income tax regulations. In-
Example 1. There are 13-week and • Box 7. The CUSIP number, if any. If there stead of using Section I to figure OID, you can
26-week T-bills maturing on the same date as is no CUSIP number, give a description of use the regulations under sections 1272
the T-bill being redeemed. The price actually the debt instrument, including the abbrevi- through 1275 of the Internal Revenue Code. For
paid by the owner cannot be established by ation for the stock exchange, the abbrevia- example, under the regulations, you can use
owner or middleman records. You treat as the tion used by the stock exchange for the is- monthly accrual periods in figuring OID for a

Page 4 Publication 1212 (January 2020)

debt instrument issued after April 3, 1994, that a. The payee does not certify, under cash payments before maturity, backup with-
provides for monthly payments. (If you use Sec- penalties of perjury, that he or she is holding applies when the cash payments are
tion I-B, the OID is figured using 6-month ac- not subject to backup withholding un- made. For payments before maturity, the
crual periods.) der (3); or amount subject to withholding is the qualified
For a general explanation of the rules for fig- stated interest (defined earlier under Defini-
b. The payee does not certify, under
uring OID under the regulations, see Figuring tions) includible in the owner's gross income for
penalties of perjury, that the TIN given
OID on Long-Term Debt Instruments under In- the calendar year. For a payment at maturity,
is correct.
formation for Owners of OID Debt Instruments, the amount subject to withholding is only the to-
later. However, for short-term discount obligations tal of any qualified stated interest paid at matur-
(other than government obligations), bearer ity and the OID includible in the owner's gross
income for the calendar year when the obliga-
Certificates of Deposit bonds and coupons, and U.S. savings bonds,
tion matures. The required withholding at ma-
backup withholding applies to reportable inter-
est and OID only if the payee does not give you turity is limited to the cash paid.
If you hold a bank certificate of deposit (CD) as a TIN or gives you an obviously incorrect num-
a nominee, you must determine whether the CD ber for a TIN. Sales and redemptions. If you report the
has OID and any OID includible in the income of gross proceeds from a sale, exchange, or re-
the owner. You must file an information return Short-term obligations. Backup withholding demption of a debt instrument on Form 1099-B
showing the reportable interest and OID, if any, applies to the payment of OID that is includible for a calendar year, you may be required to
on the CD. These rules apply whether or not in the holder’s gross income, to the extent it is in withhold 24% of the amount reported. Backup
you sold the CD to the owner. Report OID on a cash. However, backup withholding applies to withholding applies in the following situations.
CD in the same way as OID on other debt in- any interest payable before maturity when the • The payee does not give you a TIN.
struments. See Short-Term Obligations Re- interest is paid or credited. • The IRS notifies you that the payee gave
deemed at Maturity and Long-Term Debt Instru- an incorrect TIN.
If the owner of a short-term obligation at ma-
ments, earlier. • For debt instruments held in an account
turity is not the original owner and can establish
the purchase price of the obligation, the amount opened after 1983, the payee does not
Bearer Bonds and Coupons subject to backup withholding must be deter- certify, under penalties of perjury, that the
mined by treating the purchase price as the is- TIN given is correct.
If a coupon from a bearer bond is presented to sue price. However, you can choose to disre-
gard that price if it would require significant Payments outside the United States to U.S.
you for collection before the bond matures, you
manual intervention in the computer or record- person. The requirements for backup with-
generally must report the interest on Form
keeping system used for the obligation. If the holding and information reporting apply to pay-
1099-INT. However, do not report the interest if
purchase price of a listed obligation is not es- ments of OID and interest made outside the
either of the following applies.
tablished or is disregarded, you must use the is- United States to a U.S. person, or a foreign per-
• You hold the bond as a nominee for the son at least 50% of whose income for the pre-
true owner. sue price shown in Section III.
ceding 3-year period is effectively connected
• The payee is a foreign person. See Pay- with the conduct of a U.S. trade or business.
ments to foreign person under Backup Long-term obligations. If no cash payments
Withholding, , later. are made on a long-term obligation before ma-
turity, backup withholding applies only at matur- Payments to foreign person. The following
Because you cannot assume the presenter of ity. The amount subject to backup withholding is discussions explain the rules for backup with-
the coupon also owns the bond, you should not the OID includible in the owner's gross income holding and information reporting on payments
report OID on the bond on Form 1099-OID. The for the calendar year when the obligation ma- to foreign persons.
coupon may have been “stripped” (separated) tures. The amount to be withheld is limited to
from the bond and separately purchased. U.S. source amount. Backup withholding
the cash paid. and information reporting are not required for
However, if a long-term bearer bond in the Registered long-term obligations with payments of U.S.-source OID, interest, or pro-
OID tables is presented to you for redemption cash payments. If a registered long-term obli- ceeds from a sale or redemption of an OID in-
upon call or maturity, you should prepare a gation has cash payments before maturity, strument if the payee has given you proof (gen-
Form 1099-OID showing the OID for that calen- backup withholding applies when a cash pay- erally, the appropriate Form W-8 or an
dar year, as well as any coupon interest pay- ment is made. The amount subject to backup acceptable substitute) that the payee is a for-
ments collected at the time of redemption. withholding is the total of the qualified stated in- eign person. A U.S. resident is not a foreign
terest (defined earlier under Definitions) and person. For proof of the payee's foreign status,
OID includible in the owner's gross income for you can rely on the appropriate Form W-8 or on
Backup Withholding the calendar year when the payment is made. If documentary evidence for payments made out-
more than one cash payment is made during side the United States to an offshore account
If you report OID on Form 1099-OID or interest the year, the OID subject to withholding for the or, in case of broker proceeds, a sale effected
on Form 1099-INT for a calendar year, you may year must be allocated among the expected outside the United States. Receipt of the appro-
be required to apply backup withholding to the cash payments in the ratio that each bears to priate Form W-8 does not relieve you from infor-
reportable payment at a rate of 24%. The the total of the expected cash payments. For mation reporting and backup withholding if you
backup withholding is deducted at the time a any payment, the required withholding is limited actually know the payee is a U.S. person.
cash payment is made. See Pub. 1281 for more to the cash paid. For information about the 24% withholding
information. tax that may apply to payments of U.S.-source
Payee not the original owner. If the OID or interest to foreign persons, see Pub.
Backup withholding generally applies to re- payee is not the original owner of the obligation, 515.
portable interest and OID in the following situa- the OID subject to backup withholding is the
tions. OID includible in the gross income of all owners Foreign-source amount. Backup with-
during the calendar year (without regard to any holding and information reporting are not re-
1. The payee does not give you a taxpayer quired for payments of foreign-source OID and
amount paid by the new owner at the time of
identification number (TIN). interest paid and received outside the United
transfer). The amount subject to backup with-
2. The IRS notifies you that the payee gave holding at maturity of a listed obligation must be States. However, if the payments are made in-
an incorrect TIN. determined using the issue price shown in Sec- side the United States, the requirements for
tion I. backup withholding and information reporting
3. The IRS notifies you that the payee is sub- will apply unless the payee has given you the
ject to backup withholding due to payee Bearer long-term obligations with cash appropriate Form W-8 or acceptable substitute
underreporting. payments. If a bearer long-term obligation has as proof that the payee is a foreign person.
4. For debt instruments acquired after 1983:

Publication 1212 (January 2020) Page 5

 More information. For more information Example 3. Assume the same facts as Ex- that you have not elected to use a constant
about information reporting on foreign-source ample 2, except the debt instrument was issued yield method under section 1276(b) to deter-
amounts or payments to foreign persons, and at $950. You must report part of the $50 OID mine accruals of market discount, your broker
backup withholding, see, respectively, Regula- each year because it is more than $25. will use a constant yield method to determine
tions sections 1.6049-5 and 31.3406(g)-1. accruals of market discount rather than a rata-
Choice to report all interest as OID. Gener- ble method.
ally, you can choose to treat all interest on a
Information for debt instrument acquired after April 3, 1994, as See Market Discount Bonds in chapter 1 of
Pub. 550 for information on how to figure ac-
OID and include it in gross income by using the
Owners of OID constant yield method. See Constant yield crued market discount and include it in your in-

Debt Instruments method under Debt Instruments Issued After

1984, later, for more information.
come currently and for other information about
market discount bonds.
For this choice, interest includes stated in-
This section is for persons who prepare their If you choose to use the constant yield
terest, acquisition discount, OID, de minimis
own tax returns. It discusses the income tax method to figure accrued market discount, also
OID, market discount, de minimis market dis-
rules for figuring and reporting OID on long-term see Figuring OID on Long-Term Debt Instru-
count, and unstated interest, as adjusted by any
debt instruments. It also includes a similar dis- ments, later. The constant yield method of figur-
amortizable bond premium or acquisition pre-
cussion for stripped bonds and coupons, such ing accrued OID, explained under Debt Instru-
mium. For more information, see Regulations
as zero coupon bonds available through the ments Issued After July 1, 1982, and Before
section 1.1272-3.
Department of the Treasury's STRIPS program 1985 or Debt Instruments Issued After 1984, as
and government-sponsored enterprises such appropriate, is also used to figure accrued mar-
Purchase after date of original issue. A debt
as the Resolution Funding Corporation. How- ket discount.
instrument you purchased after the date of origi-
ever, the information provided does not cover nal issue may have premium, acquisition pre-
every situation. More information can be found For more information concerning premium
mium, or market discount. If your debt instru- or market discount on an inflation-indexed debt
in the regulations under sections 1271 through ment has premium or acquisition premium, the
1275 of the Internal Revenue Code. instrument, see Regulations section 1.1275-7.
OID reported to you on Form 1099-OID may
have to be adjusted. For more information, see Sale, exchange, or redemption. Generally,
Including OID in income. Generally, you in- Showing an OID adjustment under How To Re-
clude OID in income as it accrues each year, you treat your gain or loss from the sale, ex-
port OID, later. If your debt instrument is a cov- change, or redemption of an OID debt instru-
whether or not you receive any payments from ered security under Regulations section
the debt instrument issuer. ment as a capital gain or loss if you held the
1.6045-1(a)(15), market discount, acquisition debt instrument as a capital asset. If you sold
Exceptions. The rules for including OID in premium, or premium is reported in box 5, 6, or the debt instrument through a broker, you
income as it accrues generally do not apply to 10 of Form 1099-OID, respectively. The follow- should receive Form 1099-B or an equivalent
the following debt instruments. ing rules generally do not apply to contingent statement from the broker. Use the Form
• U.S. savings bonds. payment debt instruments. 1099-B or other statement and your brokerage
• Tax-exempt obligations. (However, see Adjustment for premium. If your debt in- statements to complete Form 8949, and Sched-
Tax-Exempt Bonds and Coupons, later.) strument (other than an inflation-indexed debt ule D (Form 1040 or 1040-SR).
• Loans of $10,000 or less between individu- instrument) has premium, do not report any OID Your gain or loss is the difference between
als who are not in the business of lending as ordinary income. Your adjustment is the total the amount you realized on the sale, exchange,
money. (The dollar limit includes outstand- OID shown on your Form 1099-OID. If you pay or redemption and your basis in the debt instru-
ing prior loans by the lender to the bor- a premium to buy a debt instrument, you may ment. Your basis, generally, is your cost in-
rower.) This exception does not apply if a be able to amortize the premium over the re- creased by the OID you have included in in-
principal purpose of the loan is to avoid maining term of the debt instrument, which come each year you held it. In general, to
any federal tax. would allow you to reduce the amount of quali- determine your gain or loss on a tax-exempt
See chapter 1 of Pub. 550 for information fied stated interest reportable with respect to bond, figure your basis in the bond by adding to
about the rules for these and other types of dis- the debt instrument starting as of the date of your cost the OID you would have included in
counted debt instruments, such as short-term purchase. For more information, see Bond Pre- income if the bond had been taxable. For a cov-
and market discount obligations. Pub. 550 also mium Amortization in Pub. 550. ered security, your broker will report the adjus-
discusses rules for holders of REMIC interests ted basis of the debt instrument to you on Form
and CDOs. Adjustment for acquisition premium. If 1099-B.
your debt instrument has acquisition premium, See chapter 4 of Pub. 550 for more informa-
De minimis rule. You can treat OID as zero if reduce the OID you report. Your adjustment is tion about the tax treatment of the sale or re-
the total OID on a debt instrument is less than the difference between the OID shown on your demption of discounted debt instruments.
one-fourth of 1% (0.0025) of the stated redemp- Form 1099-OID and the reduced OID amount
tion price at maturity multiplied by the number of figured using the rules explained later under Example 4. Larry, a calendar year tax-
full years from the date of original issue to ma- Figuring OID on Long-Term Debt Instruments. If payer, bought a corporate debt instrument at
turity. Debt instruments with de minimis OID are your debt instrument is a covered security un- original issue for $86,235.00 on November 1 of
not listed in this publication. There are special der Regulations section 1.6045-1(a)(15), your Year 1. The 15-year debt instrument matures on
rules to determine the de minimis amount in the broker may either report the acquisition pre- October 31 of Year 16 at a stated redemption
case of debt instruments that provide for more mium amortization adjustment amount in box 6 price of $100,000. The debt instrument pro-
than one payment of principal. Also, the de min- or may report a net amount of OID in box 1 or vides for semiannual payments of interest at
imis rules generally do not apply to tax-exempt box 8, as applicable, that reflects the adjust- 10%. Assume the debt instrument is a capital
obligations. ment of OID by the amortized acquisition pre- asset in Larry's hands. The debt instrument has
mium. In general, your broker will use the rules $13,765.00 of OID ($100,000 stated redemp-
Example 2. You bought at issuance a in Regulations section 1.1272-2(b)(4) to deter- tion price at maturity minus $86,235.00 issue
10-year debt instrument with a stated redemp- mine the amortization of acquisition premium. price).
tion price at maturity of $1,000, issued at $980 Larry sold the debt instrument for $90,000
Market discount. If your debt instrument
with OID of $20. One-fourth of 1% of $1,000 on November 1 of Year 4. Including the OID he
has market discount that you choose to include
(the stated redemption price) times 10 (the will report for the period he held the debt instru-
in income currently and if the debt instrument is
number of full years from the date of original is- ment in Year 4, Larry has included $4,556.00 of
a covered security under Regulations section
sue to maturity) equals $25. Under the de mini- OID in income and has increased his basis by
1.6045-1(a)(15), the market discount includible
mis rule, you can treat the OID as zero because that amount to $90,791.00. Larry has realized a
in income is reported in box 5 of Form 1099-
the $20 discount is less than $25. loss of $791.00. All of Larry's loss is capital
OID. Unless you notify your broker in writing
loss.

Page 6 Publication 1212 (January 2020)

Form 1099-OID net adjusted amount of OID in box 1 or b. Below the subtotal, write “Nominee
box 8, as applicable, that reflects the ad- Distribution” or “OID Adjustment” and
justment of the OID by the amortized ac- show the OID you are not required to
The issuer of the debt instrument (or your
quisition premium. report.
broker, if you purchased or held the debt instru-
ment through a broker) should give you a copy
• The debt instrument is a stripped bond or c. Subtract that OID from the subtotal
coupon (including zero coupon bonds
of Form 1099-OID or a similar statement if the and enter the result on line 2.
backed by U.S. Treasury securities).
accrued OID for the calendar year is $10 or
more and the term of the debt instrument is
• The debt instrument is a contingent pay- 2. If the OID, as adjusted, is more than the
ment or inflation-indexed debt instrument. amount shown on Form 1099-OID, show
more than 1 year. Form 1099-OID shows all
See the discussions under Figuring OID on the adjustment as follows.
OID income in box 1 except OID on a U.S.
Treasury obligation, which is shown in box 8. It Long-Term Debt Instruments or Figuring OID on a. Under your last entry on line 1, subto-
also shows, in box 2, any qualified stated inter- Stripped Bonds and Coupons, later, for the spe- tal all interest and OID income listed
est you must include in income. (However, any cific computations. on line 1.
qualified stated interest on TIPS can be repor-
Refiguring interest. If you disposed of a debt b. Below the subtotal, write “OID Adjust-
ted on Form 1099-INT in box 3.) For a taxable
instrument or acquired it from another holder ment” and show the additional OID.
covered security, Form 1099-OID may show ac-
crued market discount in box 5, acquisition pre- between interest dates, see the discussion un- c. Add that OID to the subtotal and enter
mium in box 6, or premium in box 10. For a tax- der Bonds Sold Between Interest Dates in the result on line 2.
able covered security with acquisition premium, chapter 1 of Pub. 550 for information about refi-
box 1 or box 8, as applicable, may show a net guring the interest shown on Form 1099-OID in Note. The above does not apply to a debt
amount of OID that reflects the offset of OID by box 2. instrument acquired at an acquisition premium if
the amount of acquisition premium amortization the broker reported a net amount of OID rather
for the year. If so, box 6 will be blank. For a cov- Nominee. If you are the holder of an OID debt than a gross amount of OID in box 1 or box 8.
ered security with bond premium, box 2 may instrument and you receive a Form 1099-OID
that shows your taxpayer identification number
show a net amount of qualified stated interest
that reflects the offset of interest income by the and includes amounts belonging to another per- Figuring OID on
amount of premium amortization for the year. If son, you are considered a “nominee.” You must Long-Term Debt Instruments
so, box 10 will be blank. A copy of Form file another Form 1099-OID for each actual
1099-OID will be sent to the IRS. Do not attach owner, showing the OID for the owner. Show How you figure the OID on a long-term debt in-
your copy to your tax return. Keep it for your re- the owner of the debt instrument as the “recipi- strument depends on the date it was issued. It
cords. ent” and you as the “payer.” may also depend on the type of the debt instru-
Complete Form 1099-OID and Form 1096 ment. There are different rules for each of the
If you are required to file a tax return and file the forms with the Internal Revenue following debt instruments.
! and you receive Form 1099-OID show- Service Center for your area. See Where to File
CAUTION ing taxable amounts, you must report
in the Instructions for Form 1096. You must also 1. Debt instruments issued after July 1,
these amounts on your return. A 20% accu- give a copy of the Form 1099-OID to the actual 1982, and before 1985.
racy-related penalty may be charged for under- owner. However, you are not required to file a 2. Debt instruments issued after 1984 (other
payment of tax due to either negligence or dis- nominee return to show amounts belonging to than debt instruments described in Box 6
regard of rules and regulations or substantial your spouse. See the Form 1099-OID instruc- under Form 1099-OID, earlier).
understatement of tax. tions for more information.
3. Contingent payment debt instruments is-
When preparing your tax return, follow the
Tax-exempt obligations. For a tax-exempt sued after August 12, 1996.
instructions under Showing an OID adjustment
OID obligation that is a covered security ac- in the next discussion. 4. Inflation-indexed debt instruments (includ-
quired on or after January 1, 2017, box 11 of ing TIPS) issued after January 5, 1997.
Form 1099-OID shows the tax-exempt OID on
the obligation for the part of the year you owned How To Report OID Zero coupon bonds. The rules for figuring
it. If there is an amount in both boxes 10 and 11, OID on zero coupon bonds backed by U.S.
for a tax-exempt obligation that is a covered se- You report your taxable interest and OID in- Treasury securities are discussed under Figur-
curity acquired on or after January 1, 2017, and come on the interest line of Form 1040 or ing OID on Stripped Bonds and Coupons, later.
issued with OID, the amount in box 10 shows 1040-SR.
the amount of premium amortization for the year Form 1099-OID. You should receive a Form
that reduces the amount of your tax-exempt in- Where to report. List each payer's name (if a 1099-OID showing OID for the part of the year
terest for the year. The payer may, but is not re- brokerage firm gave you a Form 1099, list the you held the debt instrument. However, if you
quired to, report the premium amortization for a brokerage firm as the payer), and the amount paid an acquisition premium, you may need to
tax-exempt obligation that is a covered security received from each payer on Schedule B (Form refigure the OID to report on your tax return.
acquired before January 1, 2017, and issued 1040 or 1040-SR), line 1. Include all OID and See Reduction for acquisition premium, later. If
with OID. qualified stated interest shown on any Form your debt instrument is a covered security un-
1099-OID, boxes 1, 2, and 8, you received for der Regulations section 1.6045-1(a)(15), you
Form 1099-OID not received. If you held an the tax year. Also include any other OID and in- may not have to refigure the OID if your broker
OID debt instrument for a calendar year but did terest income for which you did not receive a reported a net adjusted amount of OID in box 1
not receive a Form 1099-OID, refer to the dis- Form 1099. or box 8, as applicable, that reflects the adjust-
cussions under Figuring OID on Long-Term ment of OID by the amortized acquisition pre-
Debt Instruments, later, for information on the Showing an OID adjustment. To report more mium.
OID you must report. or less OID than shown in box 1 or box 8 on
Form 1099-OID, list the full OID on Schedule B If you held an OID debt instrument in a
Refiguring OID. You may need to refigure the (Form 1040 or 1040-SR), Part I, line 1, and fol- calendar year but did not receive a
OID shown in box 1 or box 8 of Form 1099-OID low the instructions under (1) or (2) next. Form 1099-OID, see Form 1099-OID
to determine the proper amount to include in in- not received, immediately below, and refer to
1. If the OID, as adjusted, is less than the Section I-A, available at IRS.gov/Pub1212 by
come if one of the following applies. amount shown on Form 1099-OID, show
• You bought the debt instrument at a pre- clicking the link under Recent Developments.
the adjustment as follows.
mium or at an acquisition premium. How-
ever, if you bought a covered security at an a. Under your last entry on line 1, subto- Form 1099-OID not received. The OID listed
acquisition premium, you may not have to tal all interest and OID income listed is for each $1,000 of redemption price. You
refigure the OID if your broker reported a on line 1. must adjust the listed amount if your debt

Publication 1212 (January 2020) Page 7

instrument has a different principal amount. For See Constant yield method and the discussions each anniversary thereafter, or the shorter pe-
example, if you have a debt instrument with a on acquisition premium that follow, later. riod to maturity for the last accrual period. Your
$500 principal amount, use one-half the listed tax year will usually include parts of two accrual
If you held an OID debt instrument in a
amount to figure your OID. periods.
calendar year but did not receive a
If you held the debt instrument the entire Form 1099-OID, see Form 1099-OID Daily OID. The OID for any accrual period
year, use the OID shown in Section I-A for a cal- not received, immediately below, and refer to is allocated equally to each day in the accrual
endar year. (If your debt instrument is not listed Section I-A, available at IRS.gov/Pub1212 by period. You must include in income the sum of
in Section I-A, consult the issuer for information clicking the link under Recent Developments. the OID amounts for each day you hold the debt
about the issue price and the OID that accrued
instrument during the year. If your tax year in-
for that year.) If you did not hold the debt instru-
Form 1099-OID not received. The OID listed cludes parts of two or more accrual periods,
ment the entire year, figure your OID using the
is for each $1,000 of redemption price. You you must include the proper daily OID amounts
following method.
must adjust the listed amount if your debt instru- for each accrual period.
1. Divide the OID shown by 12. ment has a different principal amount. For ex- Figuring daily OID. The daily OID for the
2. Multiply the result in (1) by the number of ample, if you have a debt instrument with a initial accrual period is figured using the follow-
complete and partial months (for example, $500 principal amount, use one-half the listed ing formula.
61/2 months) you held the debt instrument amount to figure your OID.
during a calendar year. This is the OID to If you held the debt instrument the entire
year, use the OID shown in Section I-A. (If your (ip × ytm) − qsi
include in income unless you paid an ac-
instrument is not listed in Section I-A, consult p
quisition premium. The reduction for ac-
quisition premium is discussed next. the issuer for information about the issue price,
the YTM, and the OID that accrued for that ip = issue price
Reduction for acquisition premium. If you year.) If you did not hold the debt instrument the
ytm = yield to maturity
bought the debt instrument at an acquisition entire year, figure your OID using either of the
premium, figure the OID to include in income as following methods. qsi = qualified stated interest
follows. p = number of days in accrual period
Method 1.
1. Divide the total OID on the debt instrument
1. Divide the total OID for a calendar year by
by the number of complete months, and
365 (366 for leap years). The daily OID for subsequent accrual peri-
any part of a month, from the date of origi-
ods is figured the same way except the adjus-
nal issue to the maturity date. This is the 2. Multiply the result in (1) by the number of
ted issue price at the beginning of each period
monthly OID. days you held the debt instrument during
is used in the formula instead of the issue price.
that particular year.
2. Subtract from your cost the issue price
and the accumulated OID from the date of This computation is an approximation and may Reduction for acquisition premium on debt
issue to the date of purchase. (If the result result in a slightly higher OID than method 2. instruments purchased before July 19,
is zero or less, stop here. You did not pay 1984. If you bought the debt instrument at an
an acquisition premium.) Method 2. acquisition premium before July 19, 1984, fig-
1. Look up the daily OID for the first accrual ure the OID includible in income by reducing the
3. Divide the amount figured in (2) by the
period you held the debt instrument during daily OID by the daily acquisition premium. Fig-
number of complete months, and any part
a calendar year. (See Accrual period un- ure the daily acquisition premium by dividing
of a month, from the date of your purchase
der Constant yield method next.) the total acquisition premium by the number of
to the maturity date.
days in the period beginning on your purchase
4. Subtract the amount figured in (3) from the 2. Multiply the daily OID by the number of date and ending on the day before the date of
amount figured in (1). This is the OID to in- days you held the debt instrument during maturity.
clude in income for each month you hold that accrual period.
the debt instrument during the year. 3. If you held the debt instrument for part of Reduction for acquisition premium on debt
both accrual periods, repeat (1) and (2) for instruments purchased after July 18, 1984.
Transfers during the month. If you buy or sell the second accrual period. If you bought the debt instrument at an acquisi-
a debt instrument on any day other than the tion premium after July 18, 1984, figure the OID
same day of the month as the date of original is- 4. Add the results of (2) and (3). This is the includible in income by reducing the daily OID
sue, the portion of OID for the month of sale is OID to include in income, unless you paid by the daily acquisition premium. However, the
divided between the seller and the buyer ac- an acquisition premium. (The reduction for method of figuring the daily acquisition premium
cording to the number of days each held the acquisition premium is discussed later.) is different from the method described in the
debt instrument. Your holding period for this preceding discussion. To figure the daily ac-
purpose begins the day you acquire the debt in- Constant yield method. This discussion quisition premium under this method, multiply
strument and ends the day before you dispose shows how to figure OID on debt instruments is- the daily OID by the following fraction.
of it. sued after July 1, 1982, and before 1985, using • The numerator is the acquisition premium.
a constant yield method. OID is allocated over • The denominator is the total OID remaining
the life of the debt instrument through adjust- for the debt instrument after your purchase
Debt Instruments Issued After ments to the issue price for each accrual pe- date.
July 1, 1982, and Before 1985 riod.
Figure the OID allocable to any accrual pe- Section I-A is available at IRS.gov/
If you hold these debt instruments as capital as- Pub1212 by clicking the link under Re-
riod as follows.
sets, you must include part of the OID in income cent Developments.
each year you own the debt instruments and in- 1. Multiply the adjusted issue price at the be-
crease your basis by the amount included. For ginning of the accrual period by the debt Using Section I-A to figure accumulated
information about showing the correct OID on instrument's YTM. OID. If you bought your corporate debt instru-
your tax return, see How To Report OID, earlier. ment in a calendar year or the subsequent year,
2. Subtract from the result in (1) any qualified
stated interest allocable to the accrual pe- you can figure the accumulated OID to the date
Form 1099-OID. You should receive a Form of purchase by adding the following amounts.
riod.
1099-OID showing OID for the part of the year
you held the debt instrument. However, if you Accrual period. An accrual period for any 1. The amount from the “Total OID to Janu-
paid an acquisition premium, you may need to OID debt instrument issued after July 1, 1982, ary 1, YYYY” column for your debt instru-
refigure the OID to report on your tax return. and before 1985 is each year period beginning ment.
on the date of the issue of the obligation and

Page 8 Publication 1212 (January 2020)

 2. The OID from January 1 of a calendar year $500 principal amount, use one-half the listed 31 of each calendar year. Any short period is in-
to the date of purchase, figured as follows. amount to figure your OID. cluded as the first accrual period.
Use the OID shown in Section I-B for a cal- For debt instruments issued after April 3,
a. Multiply the daily OID for the first ac-
endar year if you held the debt instrument the 1994, accrual periods may be of any length and
crual period in the calendar year by
entire year. (If your debt instrument is not listed may vary in length over the term of the debt in-
the number of days from January 1 to
in Section I-B, consult the issuer for information strument, as long as each accrual period is no
the date of purchase, or the end of the
about the issue price, the YTM, and the OID longer than 1 year and all payments are made
accrual period if the debt instrument
that accrued for that year.) If you did not hold on the first or last day of an accrual period.
was purchased in the second or third
the debt instrument the entire year, figure your However, the OID listed for these debt instru-
accrual period.
OID as follows. ments in Section I-B has been figured using
b. Multiply the daily OID for each subse- 6-month accrual periods.
quent accrual period by the number of 1. Look up the daily OID for the first accrual
days in the period to the date of pur- period in which you held the debt instru- Daily OID. The OID for any accrual period
chase or the end of the accrual pe- ment during a calendar year. (See Accrual is allocated equally to each day in the accrual
riod, whichever applies. period under Constant yield method, period. Figure the amount to include in income
later.) by adding the OID for each day you hold the
c. Add the amounts figured in (2a) and debt instrument during the year. Since your tax
(2b). 2. Multiply the daily OID by the number of
year will usually include parts of two or more ac-
days you held the debt instrument during
crual periods, you must include the proper daily
that accrual period.
Debt Instruments OID for each accrual period. If your debt instru-
Issued After 1984 3. Repeat (1) and (2) for any remaining ac- ment has 6-month accrual periods, your tax
crual periods in which you held the debt year will usually include one full 6-month ac-
If you hold debt instruments issued after 1984, instrument. crual period and parts of two other 6-month pe-
you must report part of the OID in gross income riods.
4. Add the results of (2) and (3). This is the
each year that you own the debt instruments. OID to include in income for that year, un- Figuring daily OID. The daily OID for the
You must include the OID in gross income less you paid an acquisition premium. initial accrual period is figured using the follow-
whether or not you hold the debt instrument as (The reduction for acquisition premium is ing formula.
a capital asset. Your basis in the debt instru- discussed later.)
ment is increased by the OID you include in in-
come. For information about showing the cor- (ip × ytm/n) − qsi
Tax-exempt bond. If you own a tax-exempt
rect OID on your tax return, see How To Report p
bond, figure your basis in the bond by adding to
OID, earlier. your cost the OID you would have included in
income if the bond had been taxable. You need ip = issue price
Form 1099-OID. You should receive a Form to make this adjustment to determine if you
1099-OID showing OID for the part of a calen- have a gain or loss on a later disposition of the
ytm = yield to maturity
dar year you held the debt instrument. How- bond. In general, use the rules that follow to de- n = number of accrual periods in 1 year
ever, if you paid an acquisition premium, you termine your OID. If your tax-exempt bond is a qsi = qualified stated interest
may need to refigure the OID to report on your covered security under Regulations section
tax return. See Constant yield method and Re- 1.6045-1(a)(15), your broker will make this ad- p = number of days in accrual period
duction for acquisition premium, later. justment to your basis and will report the adjus-
If your taxable debt instrument is a covered ted basis on Form 1099-B.
security, your broker will figure the amortization The daily OID for subsequent accrual peri-
of acquisition premium for you. Your broker may Constant yield method. This discussion ods is figured the same way except the adjus-
report either a gross amount of OID in box 1 or shows how to figure OID on debt instruments is- ted issue price at the beginning of each period
box 8, as applicable, and the acquisition pre- sued after 1984 using a constant yield method. is used in the formula instead of the issue price.
mium amortization in box 6, or may report a net (The special rules that apply to contingent pay-
amount of OID that reflects the offset of OID by ment debt instruments and inflation-indexed Example 5. On January 1 of Year 1, you
the amount of acquisition premium amortization debt instruments are explained later.) OID is al- bought a 15-year, 10% debt instrument of A
for the year in box 1 or box 8, as applicable. In located over the life of the debt instrument Corporation at original issue for $86,235.17. Ac-
general, your broker will use the rules in Regu- through adjustments to the issue price for each cording to the prospectus, the debt instrument
lations section 1.1272-2(b)(4) to determine the accrual period. matures on December 31 of Year 15 at a stated
amortization of acquisition premium. However, Figure the OID allocable to any accrual pe- redemption price of $100,000. The YTM is 12%,
you may use a constant yield method to amor- riod as follows. compounded semiannually. The debt instru-
tize acquisition premium if you make an election ment provides for qualified stated interest pay-
under Regulations section 1.1272-3. 1. Multiply the adjusted issue price at the be-
ginning of the accrual period by a fraction. ments of $5,000 on June 30 and December 31
You may also need to refigure the OID for a of each calendar year. The accrual periods are
contingent payment or inflation-indexed debt in- The numerator of the fraction is the debt
instrument's YTM, and the denominator is the 6-month periods ending on each of these
strument on which the amount reported on dates. The number of days for the first accrual
Form 1099-OID is inaccurate. See Contingent the number of accrual periods per year.
The yield must be stated appropriately tak- period (January 1 through June 30) is 181 days
Payment Debt Instruments or Inflation-Indexed (182 for leap years). The daily OID for the first
Debt Instruments, later. ing into account the length of the particular
accrual period. accrual period is figured as follows.
If you held an OID debt instrument in a
calendar year but did not receive a 2. Subtract from the result in (1) any qualified
($86,235.17 x 0.12/2) – $5,000
Form 1099-OID, see Form 1099-OID stated interest allocable to the accrual pe-
181 days
not received, immediately below, and refer to riod.
Section I-B, available at IRS.gov/Pub1212 by Accrual period. For debt instruments is-
clicking the link under Recent Developments. sued after 1984 and before April 4, 1994, an ac- $174.11020
= = $0.96193
crual period is each 6-month period that ends 181
Form 1099-OID not received. The OID listed on the day that corresponds to the stated ma-
is for each $1,000 of redemption price. You turity date of the debt instrument or the date 6 The adjusted issue price at the beginning of
must adjust the listed amount if your debt instru- months before that date. For example, a debt the second accrual period is the issue price
ment has a different principal amount. For ex- instrument maturing on March 31 has accrual plus the OID previously includible in income
ample, if you have a debt instrument with a periods that end on September 30 and March ($86,235.17 + $174.11), or $86,409.28. The

Publication 1212 (January 2020) Page 9

number of days for the second accrual period accrual period. You may use any reasonable Contingent Payment
(July 1 through December 31) is 184 days. The compounding method in determining OID for a Debt Instruments
daily OID for the second accrual period is fig- short period. Examples of reasonable com-
ured as follows. pounding methods include continuous com- This discussion shows how to figure OID on a
pounding and monthly compounding (that is, contingent payment debt instrument issued af-
($86,409.28 x 0.12/2) – $5,000 simple interest within a month). Consult your tax ter August 12, 1996, that was issued for cash or
184 days
advisor for more information about making this publicly traded property. In general, a contin-
computation. gent payment debt instrument provides for one
The OID for the final accrual period is the or more payments that are contingent as to tim-
$184.55681 difference between the amount payable at ma- ing or amount. If you hold a contingent payment
= 184 = $1.00303
turity (other than a payment of qualified stated bond, you must report OID as it accrues each
interest) and the adjusted issue price at the be- year.
Since the first and second accrual periods ginning of the final accrual period.
coincide exactly with your tax year, you include Contingent payment debt instruments ac-
in income for Year 1 the OID allocable to the Reduction for acquisition premium. If you quired on or after January 1, 2016, are “covered
first two accrual periods, $174.11 ($0.96193 × acquired a debt instrument with OID at an ac- securities.” Dispositions of covered and non-
181 days) plus $184.56 ($1.00303 × 184 days), quisition premium, you must amortize the ac- covered securities must be reported on Form
or $358.67. Add the OID to the $10,000 interest quisition premium over the life of the debt in- 8949, Sales and Other Dispositions of Capital
you report on your income tax return for Year 1. strument. Unless you make the constant yield Assets. The gain or loss on these securities
election under Regulations section 1.1272-3, subject to the noncontingent bond method will
Example 6. Assume the same facts as in figure the OID includible in income by reducing be adjusted by any amounts shown in column
Example 5, except that you bought the debt in- the daily OID by the daily acquisition premium. (g) with a corresponding code O in column (f).
strument at original issue on May 1 of Year 1, To figure the daily acquisition premium, multiply In general, the gain from the sale of these se-
with a maturity date of April 30, Year 16. Also, the daily OID by the following fraction. curities will be ordinary and losses will be ordi-
the interest payment dates are October 31 and • The numerator is the acquisition premium. nary to the extent of prior year OID inclusions.
April 30 of each calendar year. The accrual pe- • The denominator is the total OID remaining
riods are the 6-month periods ending on each for the debt instrument after your purchase Because the actual payments on a contin-
of these dates. date. gent payment debt instrument cannot be known
The number of days for the first accrual pe- in advance, issuers and holders cannot use the
riod (May 1 through October 31) is 184 days. If your debt instrument is a covered security,
Constant yield method (discussed earlier under
The daily OID for the first accrual period is fig- your broker may either report a gross amount of
Debt Instruments Issued After 1984) without
ured as follows. OID in box 1 or box 8 and the amount of acquis-
making certain assumptions about the pay-
ition premium amortization in box 6, or your
ments on the debt instrument. To figure OID ac-
broker may report a net OID amount to you in
($86,235.17 x 0.12/2) – $5,000 cruals on contingent payment debt instruments,
box 1 or box 8, and leave box 6 blank.
184 days holders and issuers must use the noncontingent
If your broker reports a net OID amount in
bond method.
box 1 or box 8, do not deduct acquisition pre-
$174.11020 mium amortization from that amount. If your
= = $0.94625 Noncontingent bond method. Under this
184 broker reports a gross amount of OID in box 1 method, the issuer must figure a comparable
or box 8, and the amount of acquisition pre- yield for the debt instrument and, based on this
The number of days for the second accrual mium amortization in box 6, follow steps 1.a yield, construct a projected payment schedule
period (November 1 through April 30) is 181 through 1.c under Showing an OID adjustment, for the instrument, which includes a projected
days (182 for leap years). The daily OID for the earlier. fixed amount for each contingent payment. In
second accrual period is figured as follows. general, holders and issuers accrue OID on this
Example 7. Assume the same facts as in
projected payment schedule using the constant
Example 6, except that you bought the debt in-
($86,409.28 x 0.12/2) – $5,000 yield method that applies to fixed payment debt
strument on November 1 of Year 1 for $87,000,
181 days instruments. When the actual amount of a con-
after its original issue on May 1 of Year 1. The
tingent payment differs from the projected fixed
adjusted issue price on November 1 of Year 1 is
$184.55681
amount, the holders and issuers make adjust-
$86,409.28 ($86,235.17 + $174.11). In this
= = $1.01965 ments to their OID accruals. If the actual contin-
181 case, you paid an acquisition premium of
gent payment is larger than expected, both the
$590.72 ($87,000 − $86,409.28). The daily OID
issuer and the holder increase their OID ac-
If you hold the debt instrument through the for the accrual period November 1 through April
cruals. If the actual contingent payment is
end of Year 1, you must include $236.31 of OID 30, reduced for the acquisition premium, is fig-
smaller than expected, holders and issuers
in income. This is $174.11 ($0.94625 × 184 ured as follows.
generally decrease their OID accruals.
days) for the period May 1 through October 31
plus $62.20 ($1.01965 × 61 days) for the period 1) Daily OID on date of purchase Form 1099-OID. The amount shown on Form
November 1 through December 31. The OID is (2nd accrual period) . . . . . . . . . . $1.01965* 1099-OID in box 1 you receive for a contingent
added to the $5,000 interest income paid on 2) Acquisition payment debt instrument may not be the correct
October 31 of Year 1. Your basis in the debt in- premium . . . . . . . . . . $590.72 amount to include in income. For example, the
strument is increased by the OID you include in 3) Total OID remaining amount may not be correct if the actual amount
income. On January 1 of Year 2, your basis in after purchase date of the contingent payment was different from
the A Corporation debt instrument is ($13,764.83 − the projected amount. If the amount in box 1 is
$86,471.48 ($86,235.17 + $236.31). $174.11) . . . . . . . . . $13,590.72 not correct, you must figure the OID to report on
4) Line 2 ÷ line 3 . . . . . . . . . . . . . . . 0.04346 your return under the following rules. For infor-
Short first accrual period. You may have
5) Line 1 × line 4 ............... 0.04432 mation on showing an OID adjustment on your
to make adjustments if a debt instrument has a
6) Daily OID reduced for the tax return, see How To Report OID, earlier.
short first accrual period. For example, a debt
instrument with 6-month accrual periods that is acquisition premium. Line 1
$0.97533 Figuring OID. To figure OID on a contingent
issued on February 15 and matures on October − line 5 . . . . . . . . . . . . . . .
payment debt instrument, you need to know the
31 has a short first accrual period that ends * As shown in Example 6, earlier.
“comparable yield” and “projected payment
April 30. (The remaining accrual periods begin schedule” of the debt instrument. The issuer
on May 1 and November 1.) For this short pe- The total OID to include in income for Year 1
is $59.50 ($0.97533 × 61 days). must make these available to you.
riod, figure the daily OID as described earlier,
but adjust the yield for the length of the short

Page 10 Publication 1212 (January 2020)

 Comparable yield. The comparable yield Treatment of gain or loss on sale or ex- The daily index ratios for TIPS are
generally is the yield at which the issuer would change. If you sell a contingent payment debt available on the Internet at
issue a fixed rate debt instrument with terms instrument at a gain, your gain is ordinary in- TreasuryDirect.gov/instit/annceresult/
and conditions similar to those of the contingent come (interest income), even if you hold the tipscpi/tipscpi.htm.
payment debt instrument. The comparable yield debt instrument as a capital asset. If you sell a
is determined as of the debt instrument's issue contingent payment debt instrument at a loss, Form 1099-OID. The amount shown in box 8
date. your loss is an ordinary loss to the extent of of the Form 1099-OID you receive for an infla-
your prior OID accruals on the debt instrument. tion-indexed debt instrument may not be the
Projected payment schedule. The projec- If the debt instrument is a capital asset, treat
ted payment schedule for a contingent payment correct amount to include in income. For exam-
any loss that is more than your prior OID ac- ple, the amount may not be correct if you
debt instrument includes all fixed payments due cruals as a capital loss.
under the instrument and a projected fixed bought the debt instrument other than at original
amount for each contingent payment. The pro- issue or sold it during the year. If the amount
jected payment schedule is created by the is- See Regulations section 1.1275-4(b) for ex- shown in box 8 is not correct, you must figure
suer as of the debt instrument's issue date. It is ceptions to these rules. the OID to report on your return under the fol-
used to determine the issuer's and holder's in- lowing rules. For information about showing an
Premium, acquisition premium, and market OID adjustment on your tax return, see How To
terest accruals and adjustments.
discount. The rules for accruing premium, ac- Report OID, earlier.
Steps for figuring OID. Figure the OID on quisition premium, and market discount do not
a contingent payment debt instrument in two apply to a contingent payment debt instrument. Figuring OID. Figure the OID on an infla-
steps. See Regulations section 1.1275-4(b) to deter- tion-indexed debt instrument using one of the
mine how to account for these items. following methods.
1. Figure the OID using the Constant yield
method (discussed earlier under Debt In- • The coupon bond method, described in
struments Issued After 1984) that applies Inflation-Indexed Debt Instruments the following discussion, applies if the debt
instrument is issued at par (as determined
to fixed payment debt instruments. Use
This discussion shows how you figure OID on under Regulations section 1.1275-7(d)(2)
the comparable yield as the YTM. In gen-
certain inflation-indexed debt instruments is- (i)), all stated interest payable on the debt
eral, use the projected payment schedule
sued after January 5, 1997. An inflation-indexed instrument is qualified stated interest, and
to determine the instrument's adjusted is-
debt instrument is generally a debt instrument the coupons have not been stripped from
sue price at the beginning of each accrual
on which the payments are adjusted for inflation the debt instrument. This method applies
period (other than the initial period). Do
and deflation (such as TIPS). to TIPS, including TIPS issued with more
not treat any amount payable as qualified
than a de minimis amount of premium (see
stated interest.
Regulations section 1.1275-7).
In general, if you hold an inflation-indexed
2. Adjust the OID in (1) to account for the ac-
debt instrument, you must report as OID any in- • The discount bond method applies to
tual contingent payments. If the actual any inflation-indexed debt instrument that
crease in the inflation-adjusted principal amount
amount of the contingent payment is does not qualify for the coupon bond
of the debt instrument that occurs while you
greater than the projected fixed amount, method, such as a stripped debt instru-
held the debt instrument during the tax year.
you have a positive adjustment. If the con- ment. This method is described in Regula-
You must include the OID in gross income
tingent payment is less than the projected tions section 1.1275-7(e).
whether or not you hold the debt instrument as
fixed amount, you have a negative adjust-
a capital asset. Your basis in the debt instru- Under the coupon bond method, figure the
ment.
ment is increased by the OID you include in in- OID you must report for the tax year as follows.
Net positive adjustment. A net positive come.
Debt instrument held at the end of the
adjustment exists for a tax year when the total
tax year. If you held the debt instrument at the
of any positive adjustments described in (2) Inflation-indexed debt instruments acquired end of the tax year, figure your OID for the year
above for the tax year is more than the total of on or after January 1, 2016, are “covered secur- using the following steps.
any negative adjustments for the tax year. Treat ities.” Dispositions of covered and noncovered
a net positive adjustment as additional OID for securities must be reported on Form 8949. 1. Add the inflation-adjusted principal
the tax year. amount for the day after the last day of the
Inflation-adjusted principal amount. For any tax year and any principal payments you
Net negative adjustment. A net negative received during the year. (For TIPS, multi-
date, the inflation-adjusted principal amount of
adjustment exists for a tax year when the total ply the par value by the index ratio for the
an inflation-indexed debt instrument is the debt
of any negative adjustments described in (2) day after the last day of the tax year, and
instrument's outstanding principal amount multi-
above for the tax year is more than the total of add any principal payments received.)
plied by the index ratio for that date. (For TIPS,
any positive adjustments for the tax year. Use a
multiply the par value by the index ratio for that
net negative adjustment to offset OID on the 2. Subtract from (1) above the inflation-ad-
date.) For this purpose, determine the outstand-
debt instrument for the tax year. If the net nega- justed principal amount for the first day on
ing principal amount as if there were no inflation
tive adjustment is more than the OID on the which you held the debt instrument during
or deflation over the term of the debt instru-
debt instrument for the tax year, you can claim the tax year. (For TIPS, subtract from (1)
ment.
the difference as an ordinary loss. However, the above the product of the par value times
amount you can claim as an ordinary loss is Index ratio. This is a fraction, the numera- the index ratio for the first day held during
limited to the OID on the debt instrument you in- tor of which is the value of the reference index the tax year.)
cluded in income in prior tax years. You must for the date and the denominator of which is the
Interest is reported separately, as discussed
carry forward any net negative adjustment that value of the reference index for the debt instru-
later under Stated interest.
is more than the total OID for the tax year and ment's issue date.
prior tax years and treat it as a negative adjust- A qualified reference index measures infla- Debt instrument sold or retired during
ment in the next tax year. tion and deflation over the term of a debt instru- the tax year. If you sold the debt instrument
ment. Its value is reset each month to a current during the tax year, or if it was retired, figure
Basis adjustments. In general, increase your value of a single qualified inflation index (for ex- your OID for the year using the following steps.
basis in a contingent payment debt instrument ample, the nonseasonally adjusted U.S. City
by the OID included in income. Your basis, 1. Add the inflation-adjusted principal
Average All Items Consumer Price Index for All
however, is not affected by any negative or pos- amount for the last day on which you held
Urban Consumers (CPI-U), published by the
itive adjustments. Decrease your basis by any the debt instrument during the tax year
Department of Labor). The value of the index
noncontingent payment received and the pro- and any principal payments you received
for any date between reset dates is determined
jected contingent payment scheduled to be re- during the year. (For TIPS, multiply the par
through straight-line interpolation.
ceived. value by the index ratio for the sale or

Publication 1212 (January 2020) Page 11

 retirement date, and add any principal assuming there will be no further inflation or de- bond, treat the excess of the redemption price
payments received.) flation over the remaining term of the debt in- of the bond over the basis of the bond as OID. If
strument. You allocate any premium over the you keep the coupons, treat the excess of the
2. Subtract from (1) above the inflation-ad-
remaining term of the debt instrument by mak- amount payable on the coupons over the basis
justed principal amount for the first day on
ing the same assumption. In general, the pre- of the coupons as OID.
which you held the debt instrument during
mium allocable to a tax year offsets the interest
the tax year. (For TIPS, subtract from (1)
otherwise includible in income for the year. If Purchaser of stripped bonds or coupons. If
above the product of the par value times
the premium allocable to the year is more than you purchase a stripped bond or coupon, treat it
the index ratio for the first day held during
that interest, the difference generally offsets the as if it were originally issued on the date of pur-
the tax year.)
OID on the debt instrument for the year. See chase. If you purchase the stripped bond, treat
Interest is reported separately, as discussed Regulations section 1.1275-7 for an example as OID any excess of the stated redemption
later under Stated interest. applying the coupon bond method to a TIPS is- price at maturity over your purchase price. If
sued with more than a de minimis amount of you purchase the stripped coupon, treat as OID
Example 8. On February 6 of Year 9, you premium. any excess of the amount payable on the due
bought an old 10-year, 3.375% inflation-in- date of the coupon over your purchase price.
dexed debt instrument (maturing January 15 of Figuring OID on Stripped
Year 11) for $9,831. The stated principal (par
Bonds and Coupons Form 1099-OID
value) amount is $10,000 and the inflation-ad-
justed principal amount for February 6 of Year 9 The amount shown in box 8 of the Form
is $12,047.50 ($10,000 par value times 1.20475 If you strip one or more coupons from a bond
1099-OID you receive for a stripped bond or
index ratio). You held the debt instrument until and then sell or otherwise dispose of the bond
coupon may not be the proper amount to in-
August 29 of Year 9 when the inflation-adjusted or the stripped coupons, they are treated as
clude in income. If not, you must figure the OID
principal amount was $12,275.70 ($10,000 par separate debt instruments issued with OID. The
to report on your return under the rules that fol-
value times 1.22757 index ratio). Your OID for holder of a stripped bond has the right to re-
low. For information about showing an OID ad-
Year 9 is $228.20 ($12,275.70 − $12,047.50). ceive the principal (redemption price) payment.
justment on your tax return, see How To Report
Your basis in the debt instrument on August 29 The holder of a stripped coupon has the right to
OID, earlier.
of Year 9 was $10,059.20 ($9,831 cost + receive an interest payment on the bond. The
$228.20 OID) for Year 9. rule requiring the holder of a debt instrument is-
sued with OID to include the OID in gross in- Tax-Exempt Bonds and Coupons
Stated interest. Under the coupon bond come as it accrues applies to stripped bonds
method, you report any stated interest on the and coupons acquired after July 1, 1982. See The OID on a stripped tax-exempt bond, or on a
debt instrument under your regular method of Debt Instruments and Coupons Purchased Af- stripped coupon from such a bond, is generally
accounting. For example, if you use the cash ter July 1, 1982, and Before 1985 or Debt In- not taxable. However, if you acquired the strip-
method, you generally include in income for the struments and Coupons Purchased After 1984, ped bond or coupon after October 22, 1986,
tax year any interest payments received on the later, for information about figuring the OID to you must accrue OID on it to determine its basis
debt instrument during the year. report. when you dispose of it. How you figure accrued
OID and whether any OID is taxable depend on
Deflation adjustments. If your calculation to Stripped bonds and coupons include the fol- the date you bought (or are treated as having
figure OID on an inflation-indexed debt instru- lowing instruments. bought) the stripped bond or coupon.
ment produces a negative number, you do not • Zero coupon bonds available through the
have any OID. Instead, you have a deflation ad- Department of the Treasury's STRIPS pro- Acquired before June 11, 1987. None of the
justment. A deflation adjustment generally is gram and government-sponsored enterpri- OID on bonds or coupons acquired before this
used to offset interest income from the debt in- ses such as the Resolution Funding Cor- date is taxable. The accrued OID is added to
strument for the tax year. Show this offset as an poration and the Financing Corporation. the basis of the bond or coupon. The accrued
adjustment on your Schedule B (Form 1040 or • Debt instruments backed by U.S. Treasury OID is the amount that produces a YTM, based
1040-SR) in the same way you would show an securities that represent ownership inter- on your purchase date and purchase price,
OID adjustment. See How To Report OID, ear- ests in those securities. Examples include equal to the lower of the following rates.
lier. obligations backed by U.S. Treasury
bonds that are offered primarily by broker- 1. The coupon rate on the bond before the
age firms (variously called CATS, TIGRs, separation of coupons. (However, if you
You decrease your basis in the debt instru- can establish the YTM of the bond (with all
ment by the deflation adjustment used to offset etc.).
coupons attached) at the time of its origi-
interest income. nal issue, you can use that YTM instead.)
Seller of stripped bonds or coupons. If you
Example 9. Assume the same facts as in strip coupons from a bond and sell the bond or 2. The YTM of the stripped bond or coupon.
Example 8, except that you bought the debt in- coupons, include in income the interest that ac-
crued while you held the bond before the date Increase your basis in the stripped tax-ex-
strument for $9,831 on January 6 of Year 9,
of sale to the extent the interest was not previ- empt bond or coupon by the interest that ac-
when the inflation-adjusted principal amount
ously included in your income. For an obligation crued but was neither paid nor previously re-
was $12,050.10, and sold the debt instrument
acquired after October 22, 1986, you must also flected in your basis before the date you sold
on March 1 of Year 9, when the inflation-adjus-
include the market discount that accrued before the bond or coupon.
ted principal amount was $12,011.20. Because
the OID calculation for Year 9 ($12,011.20 − the date of sale of the stripped bond (or cou-
pon) to the extent the discount was not previ- Acquired after June 10, 1987. Part of the
$12,050.10) produces a negative number (neg-
ously included in your income. OID on bonds or coupons acquired after this
ative $38.90), you have a deflation adjustment.
Add the interest and market discount you in- date may be taxable. Figure the taxable part in
You use this deflation adjustment to offset the
clude in income to the basis of the bond and three steps.
stated interest reported to you on the debt in-
strument. coupons. This adjusted basis is then allocated Step 1. Figure OID as if all taxable. First,
Your basis in the debt instrument on March between the items you keep and the items you figure the OID following the rules in this section
1 of Year 9 is $9,792.10 ($9,831 cost − $38.90 sell, based on the fair market value of the items. as if all the OID were taxable. (See Debt Instru-
deflation adjustment). The difference between the sale price of the ments and Coupons Purchased After 1984,
bond (or coupon) and the allocated basis of the later.) Use the YTM based on the date you ob-
Premium on inflation-indexed debt instru- bond (or coupon) is the gain or loss from the tained the stripped bond or coupon.
ments. In general, any premium on an infla- sale.
tion-indexed debt instrument is determined as Treat any item you keep as an OID bond Step 2. Determine nontaxable part. Find
of the date you acquire the debt instrument by originally issued and purchased by you on the the issue price that would produce a YTM as of
sale date of the other items. If you keep the

Page 12 Publication 1212 (January 2020)

the purchase date equal to the lower of the fol- Debt Instruments and Coupons accrual period (which will be the case unless
lowing rates. Purchased After July 1, 1982, and the accrual period coincides with your tax year),
1. The coupon rate on the bond from which Before 1985 you must include the proper daily OID amounts
for each of the two accrual periods.
the coupons were separated. (However,
you can use the original YTM instead.) If you purchased a stripped bond or coupon af- The daily OID for the initial accrual period is
ter July 1, 1982, and before 1985, and you held figured by applying the following formula.
2. The YTM based on the purchase date and that debt instrument as a capital asset during
purchase price of the stripped coupon or any part of a calendar year, you must figure the (ap × ytm)
bond. OID to be included in income using a constant p
yield method. Under this method, OID is alloca-
Subtract this issue price from the stated re-
ted over the time you hold the debt instrument
demption price of the bond at maturity (or, in the
by adjusting the acquisition price for each ac- ap = acquisition price
case of a coupon, the amount payable on the
crual period. The OID for the accrual period is
due date of the coupon). The result is the part of ytm = yield to maturity
figured by multiplying the adjusted acquisition
the OID treated as OID on a stripped tax-ex- p = number of days in accrual period
price at the beginning of the period by the YTM.
empt bond or coupon.
Adjusted acquisition price. The adjusted ac- The daily OID for subsequent accrual peri-
Step 3. Determine taxable part. The taxa- ods is figured in the same way, except the ad-
ble part of OID is the OID determined in Step 1 quisition price of a stripped bond or coupon at
the beginning of the first accrual period is its justed acquisition price at the beginning of each
minus the nontaxable part determined in Step period is used in the formula instead of the ac-
2. purchase (or acquisition) price. The adjusted
acquisition price at the beginning of any subse- quisition price.
Exception. None of the OID on your strip- quent accrual period is the sum of the acquisi- The rules for figuring OID on these debt in-
ped tax-exempt bond or coupon is taxable if tion price and all of the OID includible in income struments are similar to those in Debt Instru-
you bought it from a person who held it for sale before that accrual period. ments Issued After July 1, 1982, and Before
on June 10, 1987, in the ordinary course of that 1985, earlier.
person's trade or business. Accrual period. An accrual period for any
stripped bond or coupon acquired before 1985
Basis adjustment. Increase the basis of Debt Instruments and Coupons
is each year period beginning on the date of the
your stripped tax-exempt bond or coupon by purchase of the obligation and each anniver-
Purchased After 1984
the taxable and nontaxable accrued OID. If you sary thereafter, or the shorter period to maturity
If you purchased a stripped bond or coupon
own a tax-exempt bond from which one or more for the last accrual period.
(other than a stripped inflation-indexed debt in-
coupons have been stripped, increase your ba-
strument) after 1984, and you held that debt in-
sis in it by the sum of the interest accrued but Yield to maturity (YTM). In general, the YTM
strument during any part of a calendar year, you
not paid before you dispose of it (and not previ- of a stripped bond or coupon is the discount
must figure the OID to be included in income
ously reflected in basis) and any accrued mar- rate that, when used in figuring the present
using a constant yield method. Under this
ket discount to the extent not previously inclu- value of all principal and interest payments, pro-
method, OID is allocated over the time you hold
ded in your income. duces an amount equal to the acquisition price
the debt instrument by adjusting the acquisition
of the debt instrument or coupon.
Example 10. Assume that a tax-exempt price for each accrual period. The OID for the
bond with a face amount of $100 due January 1 Figuring YTM. If you purchased a stripped accrual period is figured by multiplying the ad-
of Year 4 and a coupon rate of 10% (compoun- bond or coupon after July 1, 1982, but before justed acquisition price at the beginning of the
ded semiannually) was issued for $100 on Jan- 1985, and the period from your purchase date period by a fraction. The numerator of the frac-
uary 1 of Year 1. On January 1 of Year 2, the to the day the debt instrument matures can be tion is the debt instrument's YTM, and the de-
bond was stripped and you bought the right to divided exactly into full 1-year periods without nominator is the number of accrual periods per
receive the principal amount for $79.21. The including a shorter period, then the YTM can be year.
stripped bond is treated as if it was originally is- figured by applying the following formula.
sued on January 1 of Year 2 with OID of $20.79 1 If the stripped bond or coupon is an infla-
($100.00 − $79.21). This reflects a YTM at the m tion-indexed instrument, you must figure the
time of the strip of 12% (compounded semiann- OID to be included in income using the discount
srp
ually). The tax-exempt part of OID on the strip- bond method described in Regulations section
ped bond is limited to $17.73. This is the differ-
( ) ap – 1
1.1275-7(e).
ence between the redemption price ($100) and
the issue price that would produce a YTM of Adjusted acquisition price. The adjusted ac-
srp = stated redemption price at maturity
10% ($82.27). This part of the OID is treated as quisition price of a stripped bond or coupon at
OID on a tax-exempt obligation. ap = acquisition price the beginning of the first accrual period is its
The OID on the stripped bond that is more m = number of full accrual periods from purchase (or acquisition) price. The adjusted
than the tax-exempt part is $3.06. This is the purchase to maturity acquisition price at the beginning of any subse-
excess of the total OID ($20.79) over the quent accrual period is the sum of the acquisi-
tax-exempt part ($17.73). This part of the OID If the debt instrument is a stripped coupon, tion price and all of the OID includible in income
($3.06) is treated as OID on an obligation that is the stated redemption price is the amount paya- before that accrual period.
not tax exempt. ble on the due date of the coupon.
The total OID allocable to the accrual period If the period between your purchase date Accrual period. For a stripped bond or cou-
ending June 30 of Year 2 is $4.75 (6% (0.06) × and the maturity date (or due date) of the debt pon acquired after 1984 and before April 4,
$79.21). Of this, $4.11 (5% (0.05) × $82.27) is instrument does not divide into an exact num- 1994, an accrual period is each 6-month period
treated as OID on a tax-exempt obligation and ber of full 1-year periods, so that a period that ends on the day that corresponds to the
$0.64 ($4.75 − $4.11) is treated as OID on an shorter than 1 year must be included, consult stated maturity date of the stripped bond (or
obligation that is not tax exempt. Your basis in your broker or your tax advisor for information payment date of a stripped coupon) or the date
the debt instrument as of June 30 of Year 2 is about figuring the YTM. 6 months before that date. For example, a strip-
increased to $83.96 ($79.21 purchase price + ped bond that has a maturity date (or a stripped
accrued OID of $4.75). Daily OID. The OID for any accrual period is coupon that has a payment date) of March 31
allocated equally to each day in the accrual pe- has accrual periods that end on September 30
riod. You figure the amount to include in income and March 31 of each calendar year. Any short
by adding the daily OID amounts for each day period is included as the first accrual period.
you hold the debt instrument during the year. If For a stripped bond or coupon acquired af-
your tax year includes parts of more than one ter April 3, 1994, accrual periods may be of any

Publication 1212 (January 2020) Page 13

length and may vary in length over the term of n = number of accrual periods in 1 year ap = acquisition price
the debt instrument, as long as each accrual
period is no longer than 1 year and all payments srp = stated redemption price at maturity ytm = yield to maturity
are made on the first or last day of an accrual ap = acquisition price n = number of accrual periods in 1 year
period. r = number of days from purchase to end of p = number of days in accrual period
short accrual period
Yield to maturity (YTM). In general, the YTM r = number of days from purchase to end of
of a stripped bond or coupon is the discount s = number of days in accrual period ending on short accrual period
last day of short accrual period
rate that, when used in figuring the present s = number of days in accrual period ending on
value of all principal and interest payments, pro- m = number of full accrual periods from last day of short accrual period
duces an amount equal to the acquisition price. purchase to maturity
The rules for figuring OID on these debt in-
Figuring YTM. How you figure the YTM for struments are similar to those illustrated in Ex-
Example 12. On May 30 of Year 1, you
a stripped debt instrument or coupon pur- ample 5 and Example 6, earlier, under Debt In-
bought a coupon stripped from a U.S. Treasury
chased after 1984 depends on whether you struments Issued After 1984.
bond through the Department of the Treasury's
have equal accrual periods or a short initial ac-
STRIPS program for $60,000. $100,000 is pay-
crual period. Example 13. Assume the same facts as in
able on the coupon's due date, August 11 of
Example 12 and that you held the coupon for
1. Equal accrual periods. If the period Year 7. You decide to figure OID using 6-month
the rest of Year 1.
from the date you purchased a stripped bond or accrual periods. There are 12 full 6-month ac-
For the short initial accrual period from May
coupon to the maturity date can be divided crual periods and a 74-day short initial accrual
30 through August 11, the daily OID is figured
evenly into full accrual periods without including period from the purchase date to the coupon's
using Formula 2, as follows.
a shorter period, you can figure the YTM by us- due date. The YTM on this stripped coupon is
ing the following formula. figured as follows.
1 74

(( ) ( ) 181
m 1
n ×
srp
ap ) – 1 (74/181) + 12
$60,000 × (1 + 0.08406/2) − $60,000
(
2 × ($100,000 / $60,000) -1 ) 74
= 2 × (1.04203 -1) = 0.08406 = 8.406%
$1,018.48
n = number of accrual periods in 1 year = = $13.76327
Use 8.406% YTM to figure the OID for each 74
srp = stated redemption price at maturity accrual period or partial accrual period for
ap = acquisition price which you must report OID. The OID for this period is $1,018.48
($13.76327 × 74 days).
m = number of full accrual periods from
Daily OID. The OID for any accrual period is For the second accrual period from August
purchase to maturity
allocated equally to each day in the accrual pe- 12 of Year 1 through February 11 of Year 2, the
If the debt instrument is a stripped coupon, riod. You must include in income the sum of the adjusted acquisition price is $61,018.48. This is
the stated redemption price is the amount paya- daily OID amounts for each day you hold the the original $60,000 acquisition price plus
ble on the due date of the coupon. debt instrument during the year. Since your tax $1,018.48 OID for the short initial accrual pe-
year will usually include parts of two or more ac- riod. The daily OID is figured using Formula 1,
Example 11. On May 15 of Year 1, you crual periods, you must include the proper daily as follows.
bought a coupon stripped from a U.S. Treasury OID amounts for each accrual period.
bond through the Department of the Treasury's Figuring daily OID. For the initial accrual $61,018.48 × (0.08406/2)
STRIPS program for $38,000. An amount of period of a stripped bond or coupon acquired 184
$100,000 is payable on the coupon's due date, after 1984, figure the daily OID using Formula 1,
November 14 of Year 13. There are exactly 25 later, if there are equal accrual periods. Use $2,564.60671
6-month periods between the purchase date, = 184 = $13.93808
Formula 2, later, if there is a short initial accrual
May 15 of Year 1, and the coupon's due date, period.
November 14 of Year 13. The YTM on this strip- For subsequent accrual periods, figure the The OID for the part of this period included
ped coupon is figured as follows. daily OID using Formula 1 (whether or not there in Year 1 (August 12–December 31) is
1 was a short initial accrual period), but use the $1,979.21 ($13.93808 × 142 days).
The OID to be reported on your income tax
2 ×
(( $100,000
$38,000 ) 25
– 1 ) adjusted acquisition price in the formula instead
of the acquisition price. return for Year 1 is $2,997.69 ($1,018.48 +
$1,979.21).
= 2 × (1.03946 -1) = 0.07892 = 7.892%
Formula 1.
Final accrual period. The OID for the final
Use 7.892% YTM to figure the OID for each accrual period for a stripped bond or coupon is
accrual period or partial accrual period for ap × ytm/n the amount payable at maturity of the stripped
which you must report OID. p bond (or interest payable on the stripped cou-
2. Short initial accrual period. If the pe- pon) minus the adjusted acquisition price at the
Formula 2. beginning of the final accrual period. The daily
riod from the date you purchased a stripped
bond or coupon to the date of its maturity can- OID for the final accrual period is figured by di-
not be divided evenly into accrual periods, so r viding the OID for the period by the number of
that a shorter period must be included, you can s days in the period.
figure the YTM by using the following formula
ap x (1 + ytm/n) − ap
(the exact method).
1
r How To Get Tax Help
( r + m
s ) If you have questions about a tax issue, need
n × (( )
srp
ap
– 1 ) help preparing your tax return, or want to down-
load free publications, forms, or instructions, go
to IRS.gov and find resources that can help you
right away.

Page 14 Publication 1212 (January 2020)

Preparing and filing your tax return. After services. At the IRS, privacy and security are Using online tools to help prepare your re-
receiving your wage and earning statements paramount. We use these tools to share public turn. Go to IRS.gov/Tools for the following.
(Form W-2, W-2G, 1099-R, 1099-MISC) from information with you. Don’t post your social se- • The Earned Income Tax Credit Assistant
all employers and interest and dividend state- curity number or other confidential information (IRS.gov/EITCAssistant) determines if
ments from banks (Forms 1099), you can find on social media sites. Always protect your iden- you’re eligible for the EIC.
free options to prepare and file your return on tity when using any social networking site. • The Online EIN Application (IRS.gov/EIN)
IRS.gov or in your local community if you qual- helps you get an employer identification
ify. The following IRS YouTube channels pro- number.
vide short, informative videos on various tax-re- • The Tax Withholding Estimator (IRS.gov/
The Volunteer Income Tax Assistance
lated topics in English, Spanish, and ASL. W4app) makes it easier for everyone to
(VITA) program offers free tax help to people
with low-to-moderate incomes, persons with
• Youtube.com/irsvideos. pay the correct amount of tax during the
disabilities, and limited-English-speaking tax-
• Youtube.com/irsvideosmultilingua. year. The Estimator replaces the Withhold-
payers who need help preparing their own tax
• Youtube.com/irsvideosASL. ing Calculator. The redesigned tool is a
returns. The Tax Counseling for the Elderly convenient, online way to check and tailor
Watching IRS videos. The IRS Video portal
(TCE) program offers free tax help for all tax- your withholding. It’s more user-friendly for
(IRSVideos.gov) contains video and audio pre-
payers, particularly those who are 60 years of taxpayers, including retirees and self-em-
sentations for individuals, small businesses,
age and older. TCE volunteers specialize in an- ployed individuals. The new and improved
and tax professionals.
swering questions about pensions and retire- features include the following.
ment-related issues unique to seniors. Getting tax information in other languages.
– Easy to understand language;
You can go to IRS.gov to see your options For taxpayers whose native language isn’t Eng-
– The ability to switch between screens,
for preparing and filing your return, which in- correct previous entries, and skip
lish, we have the following resources available.
clude the following. screens that don’t apply;
Taxpayers can find information on IRS.gov in
• Free File. Go to IRS.gov/FreeFile to see if the following languages.
– Tips and links to help you determine if
you qualify to use brand-name software to you qualify for tax credits and deduc-
• Spanish (IRS.gov/Spanish). tions;
prepare and e-file your federal tax return • Chinese (IRS.gov/Chinese).
for free. – A progress tracker;
• Korean (IRS.gov/Korean). – A self-employment tax feature; and
• VITA. Go to IRS.gov/VITA, download the • Russian (IRS.gov/Russian).
free IRS2Go app, or call 800-906-9887 to – Automatic calculation of taxable social
• Vietnamese (IRS.gov/Vietnamese). security benefits.
find the nearest VITA location for free tax
The IRS Taxpayer Assistance Centers
return preparation.
(TACs) provide over-the-phone interpreter serv-
• The First Time Homebuyer Credit Account
• TCE. Go to IRS.gov/TCE, download the Look-up (IRS.gov/HomeBuyer) tool pro-
free IRS2Go app, or call 888-227-7669 to ice in over 170 languages, and the service is
vides information on your repayments and
find the nearest TCE location for free tax available free to taxpayers.
account balance.
return preparation.
Getting tax forms and publications. Go to
• The Sales Tax Deduction Calculator
(IRS.gov/SalesTax) figures the amount you
Employers can register to use Business IRS.gov/Forms to view, download, or print all of
can claim if you itemize deductions on
Services Online. The SSA offers online serv- the forms, instructions, and publications you
Schedule A (Form 1040 or 1040-SR),
ice for fast, free, and secure online W-2 filing may need. You can also download and view
choose not to claim state and local income
options to CPAs, accountants, enrolled agents, popular tax publications and instructions (in-
taxes, and you didn’t save your receipts
and individuals who process Forms W-2, Wage cluding the 1040 and 1040-SR instructions) on
showing the sales tax you paid.
and Tax Statement, and Forms W-2c, Correc- mobile devices as an eBook at no charge at
ted Wage and Tax Statement. Employers can IRS.gov/eBooks. Or you can go to IRS.gov/
Resolving tax-related identity theft issues.
OrderForms to place an order and have them
go to SSA.gov/employer for more information.
mailed to you within 10 business days.
• The IRS doesn’t initiate contact with tax-
payers by email or telephone to request
Getting answers to your tax ques-
personal or financial information. This in-
tions. On IRS.gov, get answers to your Access your online account (individual tax-
cludes any type of electronic communica-
tax questions anytime, anywhere. payers only). Go to IRS.gov/Account to se-
tion, such as text messages and social me-
curely access information about your federal tax
• Go to IRS.gov/Help for a variety of tools account.
dia channels.
that will help you get answers to some of
• View the amount you owe, pay online, or • Go to IRS.gov/IDProtection for information.
the most common tax questions.
set up an online payment agreement.
• If your SSN has been lost or stolen or you
• Go to IRS.gov/ITA for the Interactive Tax suspect you’re a victim of tax-related iden-
Assistant, a tool that will ask you questions
• Access your tax records online. tity theft, visit IRS.gov/IdentityTheft to learn
on a number of tax law topics and provide
• Review the past 24 months of your pay- what steps you should take.
ment history.
answers. You can print the entire interview
and the final response for your records.
• Go to IRS.gov/SecureAccess to review the Checking on the status of your refund.
required identity authentication process.
• Go to IRS.gov/Forms to search for our • Go to IRS.gov/Refunds.
forms, instructions, and publications. You
Using direct deposit. The fastest way to re-
• The IRS can’t issue refunds before
will find details on 2019 tax changes and mid-February 2020 for returns that claimed
ceive a tax refund is to combine direct deposit
hundreds of interactive links to help you the EIC or the ACTC. This applies to the
and IRS e-file. Direct deposit securely and elec-
find answers to your questions. entire refund, not just the portion associ-
tronically transfers your refund directly into your
• You may also be able to access tax law in- financial account. Eight in 10 taxpayers use di-
ated with these credits.
formation in your electronic filing software.
rect deposit to receive their refund. The IRS is-
• Download the official IRS2Go app to your
mobile device to check your refund status.
sues more than 90% of refunds in less than 21
days.
• Call the automated refund hotline at
Tax reform. Tax reform legislation affects indi- 800-829-1954.
viduals, businesses, and tax-exempt and gov-
ernment entities. Go to IRS.gov/TaxReform for Getting a transcript or copy of a return. The
Making a tax payment. The IRS uses the lat-
information and updates on how this legislation quickest way to get a copy of your tax transcript
est encryption technology to ensure your elec-
affects your taxes. is to go to IRS.gov/Transcripts. Click on either
tronic payments are safe and secure. You can
“Get Transcript Online” or “Get Transcript by
make electronic payments online, by phone,
IRS social media. Go to IRS.gov/SocialMedia Mail” to order a copy of your transcript. If you
and from a mobile device using the IRS2Go
to see the various social media tools the IRS prefer, you can order your transcript by calling
app. Paying electronically is quick, easy, and
uses to share the latest information on tax 800-908-9946.
faster than mailing in a check or money order.
changes, scam alerts, initiatives, products, and

Publication 1212 (January 2020) Page 15

Go to IRS.gov/Payments to make a payment Contacting your local IRS office. Keep in • You face (or your business is facing) an
using any of the following options. mind, many questions can be answered on immediate threat of adverse action; or
• IRS Direct Pay: Pay your individual tax bill IRS.gov without visiting an IRS Taxpayer Assis- • You’ve tried repeatedly to contact the IRS
or estimated tax payment directly from tance Center (TAC). Go to IRS.gov/LetUsHelp but no one has responded, or the IRS
your checking or savings account at no for the topics people ask about most. If you still hasn’t responded by the date promised.
cost to you. need help, IRS TACs provide tax help when a
• Debit or Credit Card: Choose an approved tax issue can’t be handled online or by phone. How Can You Reach TAS?
payment processor to pay online, by All TACs now provide service by appointment
phone, and by mobile device. so you’ll know in advance that you can get the TAS has offices in every state, the District of
• Electronic Funds Withdrawal: Offered only service you need without long wait times. Be- Columbia, and Puerto Rico. Your local advo-
when filing your federal taxes using tax re- fore you visit, go to IRS.gov/TACLocator to find cate’s number is in your local directory and at
turn preparation software or through a tax the nearest TAC, check hours, available serv- TaxpayerAdvocate.IRS.gov/Contact-Us. You
professional. ices, and appointment options. Or, on the can also call them at 877-777-4778.
• Electronic Federal Tax Payment System: IRS2Go app, under the Stay Connected tab,
Best option for businesses. Enrollment is choose the Contact Us option and click on “Lo-
required. cal Offices.” How Else Does TAS Help
• Check or Money Order: Mail your payment Taxpayers?
to the address listed on the notice or in-
structions.
The Taxpayer Advocate TAS works to resolve large-scale problems that
• Cash: You may be able to pay your taxes Service (TAS) Is Here To affect many taxpayers. If you know of one of
with cash at a participating retail store. Help You these broad issues, please report it to them at
IRS.gov/SAMS.
• Same-Day Wire: You may be able to do
same-day wire from your financial institu-
What is TAS?
TAS also has a website, Tax Reform
tion. Contact your financial institution for
TAS is an independent organization within the Changes, which shows you how the new tax
availability, cost, and cut-off times.
IRS that helps taxpayers and protects taxpayer law may change your future tax filings and helps
rights. Their job is to ensure that every taxpayer you plan for these changes. The information is
What if I can’t pay now? Go to IRS.gov/
is treated fairly and that you know and under- categorized by tax topic in the order of the IRS
Payments for more information about your op-
stand your rights under the Taxpayer Bill of Form 1040 or 1040-SR. Go to TaxChanges.us
tions.
Rights. for more information.
• Apply for an online payment agreement
(IRS.gov/OPA) to meet your tax obligation
in monthly installments if you can’t pay How Can You Learn About Your TAS for Tax Professionals
your taxes in full today. Once you complete Taxpayer Rights?
the online process, you will receive imme- TAS can provide a variety of information for tax
diate notification of whether your agree- The Taxpayer Bill of Rights describes 10 basic professionals, including tax law updates and
ment has been approved. rights that all taxpayers have when dealing with guidance, TAS programs, and ways to let TAS
• Use the Offer in Compromise Pre-Qualifier the IRS. Go to TaxpayerAdvocate.IRS.gov to know about systemic problems you’ve seen in
to see if you can settle your tax debt for help you understand what these rights mean to your practice.
less than the full amount you owe. For you and how they apply. These are your rights.
Know them. Use them.
more information on the Offer in Compro- Low Income Taxpayer
mise program, go to IRS.gov/OIC.
What Can TAS Do For You?
Clinics (LITCs)
Checking the status of an amended return.
Go to IRS.gov/WMAR to track the status of LITCs are independent from the IRS. LITCs
TAS can help you resolve problems that you
Form 1040-X amended returns. Please note represent individuals whose income is below a
can’t resolve with the IRS. And their service is
that it can take up to 3 weeks from the date you certain level and need to resolve tax problems
free. If you qualify for their assistance, you will
mailed your amended return for it to show up in with the IRS, such as audits, appeals, and tax
be assigned to one advocate who will work with
our system, and processing it can take up to 16 collection disputes. In addition, clinics can pro-
you throughout the process and will do every-
weeks. vide information about taxpayer rights and re-
thing possible to resolve your issue. TAS can
sponsibilities in different languages for individu-
help you if:
Understanding an IRS notice or letter. Go to als who speak English as a second language.
• Your problem is causing financial difficulty Services are offered for free or a small fee. To
IRS.gov/Notices to find additional information for you, your family, or your business;
about responding to an IRS notice or letter. find a clinic near you, visit IRS.gov/LITC or see
IRS Pub. 4134, Low Income Taxpayer Clinic
List.

Page 16 Publication 1212 (January 2020)

 To help us develop a more useful index, please let us know if you have ideas for index entries.
Index See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

Debt instruments issued after Information for brokers and other Publications (See Tax help)
A 1984 9 middlemen 4
Accrual period 2 Debt instruments issued after Information for owners of OID
Acquisition premium 2 July 1, 1982 8 debt instruments 6 Q
Adjusted issue price 2 Debt instruments not in the OID Issue price 3 Qualified stated interest 3
Assistance (See Tax help) tables 3 Issuers of OID debt instruments,
Definitions 2 Instructions for 2
Accrual period 2 R
B Acquisition premium 2 REMIC and CDO information
Backup withholding 5 Adjusted issue price 2 L reporting requirements 2
Bearer bonds and coupons 5 Debt instrument 3 Long-term debt instruments 4
Brokers (See Information for Issue price 3
brokers and other middlemen) Market discount 3 S
Original issue discount (OID) 2 M Section I 3
Premium 3 Market discount 3 Section II 3
Qualified stated interest 3 Section III 3
C
Stated redemption price at Short-term obligations redeemed
Certificates of deposit 5
Comments and suggestions 2 maturity 3 O at maturity 4
Yield to maturity 3 OID, figuring 4 Stated redemption price at
Contingent payment debt
instruments 10 Using section I 4 maturity 3
Using the income tax Stripped bonds and coupons,
E regulations 4 figuring OID 12
Electronic payee statements 4 OID on long-term debt Suggestions, Comments and 2
D
Debt instrument 3 instruments, figuring 7
Debt instruments: OID on stripped bonds and
Long-term 4 F coupons, figuring 12 T
Short-term 4 Form 4 OID tables, Debt Instruments Tax help 14
Debt instruments and coupons in 3
purchased after 1984 13 OID tables, Debt instruments not
Debt instruments and coupons I in 3 Y
purchased after July 1, 1982, Identity theft 15 Original issue discount (OID) 2 Yield to maturity 3, 14
and before 1985 13 Inflation-indexed debt Owners of OID debt instruments,
Debt Instruments in the OID instruments 11 information for 6
tables 3

P
Premium 3

Publication 1212 (January 2020) Page 17