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OID

   Also found in: Acronyms, Encyclopedia 0.01 sec.
OID

Original Issue Discount
The difference between a bond's face value and the amount for which it is sold by the issuer. Many bonds, especially those with low interest rates, are issued at a price less than par in order to entice buyers. Generally, the lower the interest rate, the greater the original issue discount, with zero-coupon bonds having the largest. Short of default, the original issue discount is a guaranteed profit for a bondholder, as bonds must be redeemed at face value. It is considered a form of interest and may be taxed as such.

OID


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In 1997, the Taxpayer Relief Act (TRA) added IRC [section] 1272(a)(6)(C)(iii), which requires taxpayers to treat certain credit card receivables as creating or increasing OID on the pool of credit card loans related to the receivables.
On its 1998 tax return, Capital One filed a Form 3115 to change its method of accounting for interest and OID to apply the provisions of Regs.
The OID rules also follow the hypothetical cash issuance model.
 
 
 
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