Since the amount of OID we report on your Tax Information Statement may not be the amount on which you should pay tax, you should calculate your OID adjustment. To calculate the OID adjustment, you should familiarize yourself with two terms: acquisition premium and adjusted issue price. Then, read the following sample calculation of an OID adjustment. See page 20 for an illustration of how an OID adjustment is reported on a tax return.
- ACQUISITION PREMIUM
The acquisition premium is the excess of the purchase price of a debt instrument over its adjusted issue price on the date of purchase. If your purchase price includes an acquisition premium, you may be able to offset a portion of the acquisition premium against the OID that we report to you.
- ADJUSTED ISSUE PRICE
The adjusted issue price of a debt instrument is generally equal to its original issue price plus all previously accrued OID. If you need to determine a bond’s adjusted issue price at any point, you may need to contact the bond’s issuer.
|
2008 Tax Guide (8.56MB)
Print this page
