Easy Solution
The goal is to reduce one's taxable OID income by the amount of the Amortized Bond Premium when Charles Schwab incorrectly reports the interest on those OID bonds on one's 1099-Int, leaving the 1099-OID Box 2 blank. It must be done in a way that the IRS will accept and that TurboTax accepts without flagging errors and disallowing E-filing.
The IRS wants the ABPs for all types of taxable, interest paying bonds, including those with OID,
reported on Schedule B Part I Lines 1 under a Subtotal line, on a line to be labeled "ABP Adjustment" and as a negative number. Thus the total of all ABPs in that ABP Adjustment correctly reduces one's taxable interest income reported on Schedule B Part I Line 2. If one also has ABP reported on their 1099-INT(s) from other taxable bonds, that ABP Adjustment is already there with the total of those ABPs.
The solution to the Charles Schwab reporting problem described at length in this thread is to get the ABPs from one's 1099-OIDs included into the amount on that line. It's easy. Transfer the ABP amounts for the OID bonds to the same worksheets on which the bonds' interest is reported:
- Copy/cut the ABP amount imported from one's CS 1099-OID from one's (TT) Schedule B -- Form 1099-OID (CHARLES SCHWAB & CO., INC.) Worksheet Box 10, and replace it with $0.
- Add that amount to the amount, if any, on the corresponding TT Schedule B -- Form 1099-INT (CHARLES SCHWAB & CO., INC.) Worksheet Line 11 or 12, depending on the type of bond on which the OID premium was paid.
Then, TT properly reports the sum all ABPs paid on all taxable bonds on the single ABP Adjustment line on one's Schedule B Part I Lines 1 under the Subtotal line, just the way the IRS wants it. TT doesn't report errors, and allows normal E-filing.
For several years prior I simply forwent the ABP interest income reduction on my Charles Schwab OID bonds by simply zeroing it out so that I could just get my forms filed. I discovered this method this year and filed my 2023 taxes without any problems. It saved me a few hundred dollars of over-payment.
