Original Issue Discount Security

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Original Issue Discount Security

A bond or other debt instrument that is issued at a price below its face value. For example, a bond with par of $10,000 might be issued to an investor for $7,000. All zero-coupon bonds are original issue discount debt.
References in periodicals archive ?
Limits on Charitable Contributions by Individuals Contributions to 50%-type organizations Amount Percentage Type of contribution deductible limitation Ordinary income Cost 50% property--inventory, depreciable property, agricultural products, oil and gas property, Section 306 stock, OID debt instruments, market discount bonds artwork by its creator and other property.
The primary purpose of the publication is to help brokers and other middlemen identify publicly offered OID debt instruments, which they hold as nominees for the true owners, so they can comply with their responsibility to file Forms 1099-OID and Forms 1099-INT.
This article points out the similarities between OID debt and preferred stock, gives examples of the operation of the new law, and speculates about the nature of some "deemed premiums" of the called-for regulations.
In recognition of these likenesses, the RRA made the treatment of redemptions of OID debt and preferred stock more similar.
Publication 1212, revised each October, serves two purposes: 1) it assists brokers and other middlemen in identifying publicly issued OID instruments so they may comply with OID reporting requirements, and 2) it helps OID debt instrument holders calculate the correct amount of OID to report on their tax returns.