1099 OID

[B. Jani]

I am using MAX and I know that ATX do not have 1099-OID. If I remember correctly, there is a tab where to put the amount but cannot find it. Can some one be kind enough to let me know where to put the OID amount in MAX?

TIA.

[TonyP]

It's another form of Interest, goes in the Interest input tab/window. I just add a suffix (OID) to the name of the payer to differentiate; e.g., Morgan Stanley-OID

[jasdlm]

You may also need to make an adjustment depending on the OID . . . can be done with the drop down boxes on the 1099 entry form.

[B. Jani]

Thanks JASDLM and TONYP for reply.

The one thing I am confused is that if i put it as interest it adds to the total interest income.

But if i use the drop down manu and select OID, it subtract from the total interest amount.

This is from Chase for Certificate of Deposit so seems like additional interest hence added it. I hope 'm right.

Thanks again,

[jasdlm]

Is it a market-linked CD? It's possible that at some point adjustments may be needed. More specific information is needed.

[JRS]

I don't know if this will help. The IRS publishes a guide, Pub 1212, if I remember correctly, though it has been a few years. They also publish tables with the figures for figuring OID on certain issued "instruments." I think I had to request the tables by email, but, again it has been a few years.

[taxxcpa]

Thanks JASDLM and TONYP for reply.

The one thing I am confused is that if i put it as interest it adds to the total interest income.

But if i use the drop down manu and select OID, it subtract from the total interest amount.

This is from Chase for Certificate of Deposit so seems like additional interest hence added it. I hope 'm right.

Thanks again,

The OID reported is based on the discount you would have received if you bought it at the time it was originally issued. If you bought it later and paid full price without the discount, then the OID should be subtracted from the amount of the OID.

The hard thing is if you bought it in the after-market and got some discount, but not the full unamortized amount of the original discount. Then only part should be subtracted. If you got no discount or paid a premium, then you should subtract the full OID that was reported.

There used to be an IRS publication that had the formula to calculate it. Only a PhD in math could understand the formula.

[B. Jani]

@JASDLM: The OID box 1 shows the amount $101 and discription shows certificate. This is from Chase. Client's memory is he rolled over the old CD to the new one. He doesn't know any more. Advised him to call bank and find out.

@JRS: brows thru the pub 1212 but could not get much out of this.

@TAXCPA: I asked client to call bank and find out or I will add it. Will increase tax by $12. If subtract will save $12 so marked it pending until client find out from CHASE Bank.

Thanks.

[JRS]

For your client. OID is not something you just put on your tax return each year.

1099-OID – Original Issue Discount

Original issue discount is the excess of the redemption value of an obligation over its issue price, and is amortized as interest income over the term of the obligation. The amount in box 1 is the amortization of the original issue discount for the year and should be reported as interest income on your tax return. Other period interest in box 2 is interest income other than the amortization of the original issue discount, and should also be reported as interest income on your tax return.

Below is a website your client might want to read. Basically explains OID and what can happen if down the road you sell or cash in the cd and what OID can mean to his gain or loss.

http://www.associatedcontent.com/article/7..._oid.html?cat=3

[OldJack]

Taxxcpa gave a good simple description of OID. In most cases the broker issuing the 1099-OID has correctly calculated the amount you should report as interest income. In your case the result of $12 additional tax makes it not worth the time you might spend fooling with calculating any exclusion.

[B. Jani]

@JRS: Thank you for the precise article for OID. I did browse thru the pub 1212 but this article gives the best simple explaination what it is and how to deal with it. Thanks.

@OLDJACK: When I asked my client about more research and additional fees, don't bother for $12 in taxes. But this board is the best to learn something new everyday. Thanks.