OID interest reversal

Forum|Forum|4 years ago
February 4, 2022
1 reply
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I need to claim a tax deduction for the OID accrued & claimed in prior years, but was never paid by TIAA, neither annually nor upon maturity. How they can get away with this... it's unbelievable! TIAA sent 1099s each year with an amount certain of OID interest that seemed to benefit me, but in reality, they kept it all. It benefit them, or they filled out the 1099s incorrectly. Meanwhile I paid tax on it.

I should be able to claim a loss for the OID I never received, but paid tax on.

Turbotax doesn't seem to cover this issue, but maybe I'm missing it.

TurboTax Home & Biz Windows

Mike9241

Level 15

many bonds were sold at less than par value (face value at maturity) the difference between what you paid to buy it and what you would get paid at maturity is OID. OID is amortized over the life of the bond and added to the principal (what you paid)

so your basis would be what you originally paid + the OID. if you sold it or it was called before final maturity and you got less than this total you report a capital loss if you get paid more you have a reportable capital gain. if it reached maturity, then there should be no gain or loss but you still should report it because TIAA is probably reporting it to the IRS

it is also possible the issuer went bankrupt which would make the obligation worthless. you would report a capital loss = what you paid + the OID.

if none of this applies contact TIAA, to get the whole story.

if you were not the original owner of the security, then the Original Issue Discount reported on those 1099's likely needed to be adjusted each year

longschlongAuthor

Level 2

I did talk to TIAA, and they also sent a letter. They aren't sending a 1099 in the year it reached maturity (2021), and there is no gain, or loss. But TIAA provided 1099s that indicated OID gains every year prior (2016-2020), and these gains were not sent to me ever. I need to take a loss on my tax form to offset the reported gains I was taxed on in prior years because TIAA never paid any gain.

BTW, this is a CD, not a bond.

So are you saying that these should reported as a capital loss on Sched D? I tried putting a negative value in Sched B, and TurboTax would not allow it.

Mike9241

Level 15

cd's can also have OID if the term is over 1 year and interest is payable at maturity. at maturity you should have received was what you paid + the accumulated oid. for example you may have paid $75 for the cd and received $100 at maturity with the 1099-OID amounts totaling $25 over the life of the cd

if not something is missing

go back to TIAA and ask them to explain. say i paid $X for the CD i had total OID on the CD of $Y the total is $Z but i only received $Q at maturity. WHY?

about the only situation where you would get less is if you redeemed before maturity. then you would have forfeited some of the interest. but TIAA should report that to you as forfeited interest