@rats0001
In many cases if you go ahead and declare the accrued interest paid out to the buyer...even when it isn't supposed to be declared...it won't be picked up as an error, and won't be detected as being improper, unless the IRS actually audits you. That's because the $$ in boxes 1,or 3, or 8 usually include enough "other" $$ to cover it.
BUT, if a person buys just one MUNI bond late in the year (with the next interest payout happening the next year)....and that is the only Muni bond they own. IF they try to declare the Accrued interest they paid to the seller on that year's 1099-INT, then there are zero $$ in box 8....and the software at that point will declare an error, because you cannot offset interest $$ you haven't received yet.
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As to where in the Regs it says you have to wait to the next year in certain situations...I looked it up years ago and found it, but not recently...it's in there somewhere.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
