On Friday, February 24, 2017 at 7:36:47 AM UTC-8, Not A Clue wrote:
> My 1099-B this year include an Accrued Market Discount on a bond that was sold. It increased my cost basis. Do I need to add it to my interest income -- on top of the interest income that was reported on 1099-Int?
> If yes, why is that number not automatically be included on the 1099-Int? [I didn't change brokerage firm between the purchase and sale of that bond.]
You want to look at Publication 550 (the most recent version of which is for 2017). Unfortunately it is very lengthy but
it does say:
"When you buy a market discount bond, you can choose to accrue the market discount over the period you own the bond and include it in your income currently as interest income. If you do not make this choice, the following rules generally apply."
Then goes on to say how you report it if you chose not to
accrue the market discount.
(This is a change from the past, in which you must accrue the
market discount except in de minimus situations, so it is a
actually a simplification.)
So you will want to look at how it was reported starting from the year in which you bought the bond, then follow the instructions.
My recollection is that, going back in time, brokerages would
report OID but not market discount and a TP would have to
calculate and enter the market discount manually.