Regarding your method to adjust the ordinary gain to change the ordinary tax rate with these long term market linked products--
I had a 5 year structure product (CPDI) that was linked to the stock market index. The projected OID income amounts I paid every year were too high. After the five years, the actual proceeds were about $5000, but the projected OID I paid was $21000. I would love to reduce this years income by the $16000 that I overpaid. But some people are telling me that I have to increase the cost basis causing a loss, get only $3000 capital loss credit for this year, and carry-over the rest of the loss to the future years-which I dont like.
It is ok to just reduce my income this year by the total amount of excess OID paid the previous years? Or do I have to instead change the basis value and then have a gain carry-over for the next few years?
