Accrued Interest Paid on Bonds

My question is (and I don't know if the answer to this is the same for all brokers): is there any reason not to believe the values in box 1, 3, and 8 don't already include accrued interest paid or received when bonds are bought or sold?

Looking at my 1099 from the broker I do bond transactions with, it is clear they included these amounts. They conveniently break this out in a section called "Detail Information of Interest Income". So from my perspective, I just use the amount in the box and I'm done. (Except possible on Schedule D.)

Steve

from what I can tell, my brokers' 1099s include all interest received in the boxes, including accrued interest. It is up to me to back it out with a negative number, as Tom is attempting to do.

don't know anything about tax programs, I do it by hand using back of envelopes for calculations . . .

Hopefully someone wiser than me will respond to this line, but my understanding is that they do include the accrued interest given when sold, but not that paid when purchased. They show that as a separate listing and leave it up to you to deal with. I suppose (assuming for the moment that I am right) you have to deal with the accrued interest paid in the year you buy it, but the accrued interest given waits until you sell it; so they can't do it all for you.

You're right. Scratch my statement above.

I pulled out 1099's from a couple different years and looked at them more closely ... and you're right. They include all the interest received in the box 1 total, but not any of the interest paid.

Reading Pub 550 this has a subtlety I did not previously recognize. If you buy a bond between interest dates, and pay the seller an amount for accrued interest, this amount is not immediately considered negative interest income. Instead it is -- temporarily -- part of your basis in the bond. Then, when you receive the next coupon payment (which could be in the following taxable year), the amount of interest income recognized is the coupon minus the previously paid accrued amount, and the latter is subtracted from your basis.

Slightly wacky, but I suppose it's done that way to account for the purchase date being in a different tax year than the subsequent coupon.

Steve