1099 OID adjustments for tax exempt interest

[JR500]

I am using TurboTax desktop and have a 1099-OID from Wells Fargo Advisors for tax exempt bonds.    

There are amounts in both Box 6 (acquisition premium) and Box 11 (tax-exempt OID).   I need to adjust the amounts for both items (for acquisition premium not reported to the IRS and for tax exempt original issue discount not reported to the IRS).   

TurboTax gives me the option to adjust an amount, but not to adjust both boxes.  I tried entering the amounts separately (a 1099-OID entry for Box 6 and then another for Box 11 but I received an error message).

How would I report these items?  (Alternatively, could I enter the tax exempt OID box 11 and related adjustment as tax exempt interest to a 1099-INT that I create  (and enter it in Box 😎 and then include the acquisition premium in Box 13 of the 1099-Int I create for the Wells Fargo 1099-INT.--rather than enter it in the 1099-OID screen enter the amounts in a 1099-INT screen.  The result is the same (tax exempt interest will be the correct amount, but not sure if this "fix" /work-around is appropriate).  

[baldietax]

Do you have more context why you are having to adjust these?  These amounts are usually calculated by the brokerage, and also track adjustments to cost basis which will affect your final redemption.

I think Box 6 needs to offset some OID and be smaller than Box 11, so adjusting/entering them independently probably causes issues.

[JR500]

Thank you.  

Yes, I need to adjust the amounts in Box 6 and 11 in the 1099-OID for amounts not reported to the IRS.  So, for example, Box 6 is $4950 but there is another $1950 of acquisition premium that is shown in the supplemental detail received from Wells Fargo.    And in Box 11, the tax-exempt OID is $8,750 but there is another $4,800 that is shown in the detail but not included in Box 11.

I was able to get the Box 11 information input into the 1099-OID screen of TurboTax, but when I  input the Box 6, acquisition premium, I input the $4950 and adjust for $1950 clicking the box "to amortize the premium I paid on a tax exempt bond"  (so total of $6900).  However, the amount  is not reflected in my total tax exempt interest (it should reduce it by $6,900).    I can instead input info into a 1099-INT screen (instead of 1099-OID) and include the amount in Box 13, bond premium on tax-exempt bond, and that results in the correct tax exempt interest on my 1040, but seems like I should be able to enter in on the 1099=OID screen as that's where Wells Fargo has it in the 1099 they sent me.

I appreciate your  help.

[baldietax]

I would be concerned there's a reason this isn't reported on the 1099-OID tho, have you spoken to anyone at Wells about it?  Is there something in particular about the bonds involved - see notes below about acquisitions before Jan 1, 2017 if that applies.

My experience from Schwab is they provide a 1099-OID with details that match the totals.  Then later in the "information not provided to the IRS" sections at the back of the composite they have a section for "amortization and accretion" with cost basis adjustments, YTD/LTD premium and market discount, which is a single schedule combining the 1099-OID Box 6, and also premium for bonds reported on 1099-INT Box 13.  Then they have another schedule of OID but that ties to what they already provided on the 1099-OID breakdown.  It's always seemed a bit repetitive and confusing the way they present it.  Anyway just wanted to share that as an example, to make sure that these extra details "not reported to the IRS" are not already part of what is on your 1099-OID and 1099-INT.

I do see a comment on my Schwab statement about "securities acquired after January 1, 2017" so maybe 1099-OID reporting changed (TCJA?) and some of your positions pre-dated that (mine are all after 2017).  Here's what the 1099-OID notes say

• Box 6. If there is an amount in both boxes 6 and 11, for a tax-exempt obligation that is a covered security acquired on or after January 1, 2017, and is issued with OID, the amount in box 6 shows the amount of acquisition premium amortization for the year that reduces the amount of your tax-exempt OID for the year. The payer may, but is not required to, report the acquisition premium for a tax-exempt obligation that is a covered security acquired before January 1, 2017, and issued with OID

• Box 11. For a tax-exempt obligation that is a covered security acquired on or after January 1, 2017, shows the tax-exempt OID on the obligation for the part of the year you owned it. The payer may, but is not required to, report the OID for a tax-exempt obligation that is a covered security acquired before January 1, 2017. In general, report the amount of tax-exempt OID on Form 1040 or 1040-SR

Back in TT, if they do need to be reported for whatever reason, can you input the 1099-OID provided as-is, then put in another 1099-OID with 1950 in Box 6 and 4800 in Box 11?

Not sure any impact of using 1099-INT instead i.e. 1950 in Box 13 and 4800 in Box 8, it should get to the same place.

Also are you aware of the limitations in TT making adjustments to 1099s e.g. if you input accrued interest adjustment on a 1099-INT which has multiple income types (Box 1/3/8), TT doesn't know which box to apply it to and will pro-rata it; if you have this situation you need to split up the 1099-INT.

Not a CPA/Expert so just my 2 cents, hope this helps.

[JR500]

Thanks.  Yes, the adjustments are because the bonds are prior to 1/1/17.     I like your suggestion of inputing the Box 6 and 11 amounts in the 1099-OID screen before any adjustments as they appear in the 1099-OID from Wells Fargo (WF), and then inputting the adjustments separately in Box 6 and 11 in a separate 1099-OID screen.   I get to the same result (right answer) even though it's not exactly how WF reported ,but it seems like a better way than what I was going to do.