Let me ask about another possible way of dealing with the situation when the bond premium (shown in Box 12 of Form 1099-INT) on a TIPS exceeds the interest shown in Box 3. Would it be possible to use the remaining amount of the premium to reduce the Original Issue Discount shown in box 8 of the Form 1099-OID issued for the same TIPS? I ask this because IRS Publication 1212 (Guide to Original Issue Discount Instruments) states the following general proposition: "A purchaser reduces any OID income by the acquisition premium, as discussed under Information for Owners of OID Debt Instruments, later." I realize the devil may be in the details, which is why I am seeking guidance from someone who has more familiarity with IRS publications than I have. (I would note that the Form 1099-OID worksheet on Turbotax has a place to enter the acquisition premium as an adjustment to the OID interest.)
