One correction: the remaining bond premium added to the amount you receive when the TIPS matures is the cost basis you will use, i.e. you will report a loss on the bond. Each OID payment is added to the original par value for which you paid a premium and so your cost basis will always be the current inflation adjusted par value plus your unrecovered bond premium. (This would even be the case in the extremely unlikely case that deflation brings the bond value at maturity below its original par value.)
