Instructions for Recipient
Original issue discount (OID) is the excess of an obligation’s stated redemption
price at maturity over its issue price (acquisition price for a stripped bond or
coupon). OID on a taxable obligation is taxable as interest over the life of the
obligation. If you are the holder of a taxable OID obligation, you generally must
include an amount of OID in your gross income each year you hold the
obligation. Obligations that may have OID include a bond, debenture, note,
certificate, or other evidence of indebtedness having a term of more than 1 year.
For example, the OID rules may apply to certificates of deposit (CDs), time
deposits, bonus savings plans, and other deposit arrangements, especially if the
payment of interest is deferred until maturity. In addition, the OID rules apply to
Treasury inflation-protected securities. See Pub. 550 for more information.
If, as the record holder, you receive Form 1099-OID showing amounts
belonging to another person, you are considered a nominee recipient. Complete
a Form 1099-OID for each of the other owners showing the amounts allocable to
each. File Copy A of the form with the IRS. Furnish Copy B to each owner. List
yourself as the “payer” and the other owner as the “recipient.” File Form(s)
1099-OID with Form 1096 with the Internal Revenue Service Center for your
area. On Form 1096, list yourself as the “filer.” A spouse is not required to file a
nominee return to show amounts owned by the other spouse. If you bought or
sold an obligation during the year and you are not a nominee, you are not
required to issue or file Form 1099-OID showing the OID or stated interest
allocable to the seller/buyer of the obligation.
The information provided may be different for covered and noncovered
securities. For a description of covered securities, see the Instructions for Form
8949. For a covered security acquired with acquisition premium, your payer
generally must report either (1) a net amount of OID that reflects the offset of
OID by the amount of acquisition premium amortization for the year, or (2) a
gross amount for both the OID and the acquisition premium amortization for the
year. For a noncovered security acquired with acquisition premium, your payer
is only required to report the gross amount of OID.
Recipient’s taxpayer identification number (TIN). For your protection, this
form may show only the last four digits of your TIN (social security number
(SSN), individual taxpayer identification number (ITIN), adoption taxpayer
identification number (ATIN), or employer identification number (EIN)). However,
the issuer has reported your complete TIN to the IRS.
FATCA filing requirement. If the FATCA filing requirement box is checked, the
payer is reporting on this Form 1099 to satisfy its chapter 4 account reporting
requirement. You may also have a filing requirement. See the Instructions for
Account number. May show an account or other unique number the payer
assigned to distinguish your account.
Box 1. Shows the OID on a taxable obligation for the part of the year you owned it.
Report the amount in box 1 as interest income on your income tax return. However,
depending on the type of debt instrument, the issue or acquisition date, and other
factors (for example, if you paid acquisition or bond premium, or the obligation is a
stripped bond or coupon), you may have to figure the correct amount of OID to
report on your return. See Pub. 1212 for details on how to figure the correct OID.
See the instructions above for a covered security acquired with acquisition premium.
Box 2. Shows qualified stated interest on this obligation for the year, which is an
amount separate from the OID. If you held the obligation the entire year, report
this amount as interest income on your tax return. If you disposed of the
obligation or acquired it from another holder during the year, see Pub. 550 for
reporting instructions. If there is an amount in both boxes 2 and 8, the amount in
box 2 is interest on a U.S. Treasury obligation and is exempt from state and
local income taxes. If there is an amount in both boxes 2 and 11, the amount in
box 2 is tax-exempt interest and is not included in interest income on your tax
return. In general, see how to report tax-exempt interest in the Instructions for
Forms 1040 and 1040-SR.
Box 3. Shows interest or principal forfeited if you withdrew the money before
the maturity date of the obligation, such as from a CD. You may deduct this
amount to figure your adjusted gross income on your income tax return. See the
Instructions for Forms 1040 and 1040-SR to see where to take the deduction.
Box 4. Shows backup withholding. Generally, a payer must backup withhold if
you did not furnish your TIN or you did not furnish the correct TIN to the payer.
See Form W-9 for information on backup withholding. Include this amount on
your income tax return as tax withheld.
Box 5. For a covered security acquired with OID, if you made an election under
section 1278(b) to include market discount in income as it accrues and you
notified your payer of the election in writing in accordance with Regulations
section 1.6045-1(n)(5), shows the market discount that accrued on the debt
instrument during the year while held by you. For a tax-exempt obligation that is
a covered security acquired on or after January 1, 2017, and issued with OID,
shows the market discount that accrued on the obligation during the year while
held by you. For a covered security acquired on or after January 1, 2015, market
discount will be calculated on a constant yield basis unless you notified your
payer in writing in accordance with Regulations section 1.6045-1(n)(5) that you
did not want to make a constant yield election for market discount under section
1276(b). The payer may, but is not required to, report the market discount for a
tax-exempt obligation that is a covered security acquired before January 1,
2017. Report the accrued market discount on your income tax return as directed
in the Instructions for Forms 1040 and 1040-SR. Market discount on a tax-
exempt security is includible in taxable income as interest income.
(Continued on the back of Copy 2)