On my 2009 ENHANCED 1099 under Federal Non-Reportable Information under Supplementary Information
There is an amount shown for Lehman bonds with an activity description of OID SHORTFALL.
Thanks
An OID is reported each year if you buy a bond at a discount. If you buy a zero coupon bond for $ 500 and it has a $1000 value upon maturity, the discount should be reported based on an interest rate required to generate $
500 years over the number of years from purchase to maturity. If you buy a bond at the original issue price the rate would be different than if you paid a premium or got it at below the original issue price.The mathematics to calculate the amount to report each year would baffle Einstein.>
Your post has an inconsistency. On one hand you are asking about OID (interest you declare though not received). On the other hand you ask why you should you pay tax on bonds that don't pay dividends. Which is it? Are you asking about zero coupon bonds that trigger OID or corporate bonds that pay interest (not dividends)?
Or.. are you just asking why you have to declare OID interest on zero coupon bonds that you perceive to be worthless?
Note: Last time I looked, many LB bonds were selling at 20 cents on the dollar.
Is it possible that the bonds are TIPS? If you held them all year, they lost value.
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