Accrued Interest Paid & Accrued Market Discount

[joanmcq]

I am trying to figure out how to enter a1099-Int that has both accrued interest paid and accrued market discount on US government bonds.  Right now I have an adjustment to box 3b (interest on Treasury obligations) for the accrued interest which subtracts it from the interest total on Sch B.  But I also have a bond which was sold (also US gov) with accrued market discount.

Should I just make another interest input for the accrued market discount (which I believe should be added to the interest income) or is there some other way to present this?

[Slippery Pencil]

Did you figure anything out?  I have a I have a 1099B with accrued market discount.  The adjustment on 8949 removes it from the gain, but I can't see how to get it on the Sch B unless I make a manual entry on a 1099INT.

[BrewOne]

I've had to dummy up a 1099INT before.

One fallback on OID: there is a de minimis rule (Pub 1212) if the OID is less than 1/4 of 1% of the instrument.  The pub gives an example of a $1,000 instrument with OID of $20--this is not reportable as it is less than the $25 threshold for a $1,000 instrument. 

There is also information in Pub 550.

[jasdlm]

I do the same thing; dummy up a 1099 INT.  I don't have any other ideas.

[Abby Normal]

Just combine the two items and use the Other code.

[joanmcq]

I dummied up a 1099-INT.

[Abby Normal]

6 hours ago, joanmcq said:

I dummied up a 1099-INT.

Then you must have split the interest amount into two separate 1099-INT forms, because the adjustments have to be less than or equal to the interest amount. I've combined multiple adjustments into one number routinely over the years, and never had a problem.

[Slippery Pencil]

10 hours ago, Abby Normal said:

Then you must have split the interest amount into two separate 1099-INT forms,

This isn't an adjustment listed on a 1099-INT, there's nothing to combine.  It's accrued interest on a 1099B that needs to be deducted from the gain and put on Sch B as interest income. 

[Abby Normal]

How does one verify that the amount isn't already on the 1099INT? I would assume that it is.

[joanmcq]

It's not.

[Slippery Pencil]

I'm pretty sure that's not how market discount works, though I could be wrong.  But on the consolidated 1099 I have, the interest income for each cusip is less than the market discount for that cusip.

[joanmcq]

Yes, I just got one where the market discount far exceeds the amount of reported interest.