IRS Publication 550 — Investment Income and Expenses
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“• Any foreign business you control reportable on Form 5471, Information Return of U.S. Persons With Re- spect T o Certain Foreign Corporations, or Form 8865, Return of U.S. Persons With Respect to Certain For- eign Partnerships.”
Renewable certificates. If you renew a CD at maturity, it is treated as a redemption and a purchase of a new certificate. This is true regardless of the terms of renewal. Face-Amount Certificates These certificates are subject to the OID rules. They are a form of endowment contracts issued by insurance or investment companies for either a lump-sum payment or periodic payments, with the face amount becoming payable on the maturity date of the certificate.
In general, the difference between the face amount and the amount you paid for the contract is OID. You must include a part of the OID in your income over the term of the certificate.
The issuer must give you a statement on Form 1099-OID indicating the amount you must include in your income each year.
Inflation-Indexed Debt Instruments If you hold an inflation-indexed debt instrument (other than a Series I U.S. savings bond), you must report as OID any increase in the inflation -adjusted principal amount of the instrument that occurs while you held the instrument during the year. In general, an inflation -indexed debt instrument is a debt instrument on which the payments are adjusted for inflation and deflation (such as Treasury Inflation-Protected Securities). You should receive Form 1099-OID from the payer showing the amount you must report as OID and any qualified stated interest paid to you during the year. For more information, see Pub. 1212. Stripped Bonds and Coupons If you strip one or more coupons from a bond and sell the bond or the coupons, the bond and coupons are treated as separate debt instruments issued with OID. 20 Chapter 1 Investment Income Publication 550 (2025)
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