How to enter 1099-OID payments on a 5 year bond-type investment whose purchase and sale price were the same? How to recover cost of 1099OIDs? Thanks, --- sam

Purchased 5 year bond-type investment though bank 5 years ago, redeemed in 2020. It was guaranteed so value was the same as the cost.

Entered 1099-OIDs on tax return during the 5 years.

Since the investment didn't increase, how should the OIDs be entered on 2020 return to recover their value, assuming that's possible?

Thanks,

--- sam

503

Expert Alumni

Mar 15, 2021 12:15:51 PM

If you actually received the OID over time, then your cost and redemption amount will equal and there will be no gain or loss. This is a normal transaction. If you did not get the interest credited to your on the 1099-OID, and you paid tax on it each year, then you would add that to your cost basis. This would be uncommon.

The redemption is treated like an investment sale for tax purposes.

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How to enter 1099-OID payments on a 5 year bond-type investment whose purchase and sale price were the same? How to recover cost of 1099OIDs? Thanks, --- sam