OID and Base Price of a CD

A long term CD has had its imputed interest reported as OID for the last few years. Now it has matured, and the amount is the purchase price plus the accrued interest (which has already been taxed). The CD issuer has issued a form 1099B for the total. That is the sales price. I assume that the purchase price is the sum of the initial price plus all the taxable income reported for it, which is equal to the sales price. But what should the date be? The initial purchase price, or "various"?

Reply to
Larry Israel
Loading thread data ...

The cost plus all OIDs equal the costbais is corect.

However the OIDs were probably reported to you as if you bought this as an IPO. If you bought it later, the OIDs should have been recalculated. I have asked a few times and have no found anyone who recalculates.

Various can be used, and so can the original purchase date. Ignore dates associated with accrued OID amounts.

Perhaps you are thinking of actual real dividends being reinvested to purchase more of the stuff. But in the OID case here, you do not buy more; rather you increase basis based on accrued amounts.

Reply to
Arthur Kamlet

On this topic, is there some sort of rule that determines which CD's result in OID and 1099-B's? It seems to me almost none of them do, even the ones that "compound" rather than pay interest out. Is there an accounting aspect that causes some of them to do this?

It would be nice, from a consumer point of view, if they all behaved the same, since when you invest in one you are probably in the dark on this point.

Steve

Reply to
Steve Pope

If the CD has a term of more than one year and pays all interest out at maturity, then it'll be OID.

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Reply to
Rich Carreiro

If a C/D is purchased through a stockbroker, you;re likely to see a 1099B issued in addition to an -INT or -OID.

Reply to
Arthur Kamlet

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.