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Original Issue Discount (OID)

On December 22, 2017, The Tax Cuts and Jobs Act was signed into law. The information in this article predates the tax reform legislation and may not apply to tax returns starting in the 2018 tax year. You may wish to speak to your tax advisor about the latest tax law. This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.

Original Issue Discount (OID)
Sometimes bonds are issued (sold) at a discount (thus the term “original issue discount”) and then some years later mature at face value. The difference between the issue price and the face value represents the interest paid by the bond issuer. A portion of that interest, referred to as “OID,” must be reported annually even though the bond owner doesn't actually receive any of the interest until the bond matures. Information about the amount to report is provided to the bond owner on Form 1099-OID.

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