An individual with an original issue discount (OID)instrument must report annually a portion of the OID as:

Question

Quizplus · Accepted Answer

OID instruments are issued at a discount and are sold for less than the principal amount. The difference between the sale price and the face value is treated as interest income for tax purposes and must be reported annually. This amount is called the OID, and a portion of it must be reported as interest income each year until the bond matures or is sold. Therefore, the individual must report the OID as interest income.

An Individual with an Original Issue Discount (OID)instrument Must Report