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2008 Tax Guide (8.56MB) Print this page
 Municipal Tax-Exempt Interest and Municipal Original Issue Discount
Although we do not report municipal OID to the IRS, you should report municipal OID subject to alternative minimum tax (AMT), as well as tax-exempt interest from specified private activity bonds (Form 1099-INT, Box 9) on IRS Form 6251 (Alternative Minimum Tax—Individuals). You must also report total municipal interest income on IRS Form 1040, line 8b (Tax-Exempt Interest). The sample below illustrates how this information is reported on your Tax Information Statement. The totals can be easily identified on your statement, and the sample summary and sample tax forms illustrated on the next page explain how you should report this municipal interest income and municipal OID on your tax returns.
 
Municipal Original Issue Discount
This section displays OID earned on municipal bonds. The separate totals in this section allow you to determine how much of your municipal OID is subject to the AMT. We report amounts based on the bond’s original issue price. Adjustments to the indicated amounts will have to be calculated based on your actual purchase price and date. The recalculated amount will increase the tax basis of your bond, resulting in a smaller gain or larger loss upon the ultimate disposition of the bond.