What Is OID Interest ?
Original Issue Discount (OID) occurs when a long-term debt instrument is issued at a price that is lower than its stated redemption value. OID is the difference between the stated redemption price at maturity and the issue price of a debt instrument. OID interest usually is found in debt instruments of bonds or notes. Generally, a 1099-OID slip is issued with the taxable amount included. OID interest is reportable on IRS Schedule B. There are certain exceptions to the OID requirements, as well as situations when the OID slip may be ignored. Speak to your local CPA or check IRS publication 1212 about the reporting of the 1099-OID on your tax return.
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