Or. Admin. Code § 150-316-0511

Current through Register Vol. 63, No. 11, November 1, 2024

Section 150-316-0511 - Addition for Original Issue Discount (OID)

(1) The "original issue discount" (OID), as defined in section 1273 of the Internal Revenue Code, is considered as paid in lieu of interest on state and municipal obligations of other states, and is taxable for Oregon purposes.

(2) Holders of state and municipal bonds of other states (foreign states) shall include in income the sum of the daily portion of original issue discount determined for each day during the taxable year the bond is held. The original issue discount (OID) shall be prorated over the life of the bond using the federal rules for taxable securities under Section 1272 of the Internal Revenue Code and corresponding regulations.

Example: On July 1, 1987, Jack purchased a California municipal bond for $800. The bond matures in two years and has a stated redemption price of $1,000. The bond contains $200 of original issue discount (stated redemption price of $1,000 less issue price of $800). Because the bond does not provide for periodic payments of interest, a six-month accrual period ending December 31 and June 30 of each calendar year is used to determine the semiannual yield factor of 5.74 percent ($800 compounded semiannually for two years at 5.74 percent is $1,000). The amount of the original issue discount included in income for the period ending December 31, 1987, is the issue price ($800), multiplied by the semiannual yield factor of 5.74 percent, or $45.90. The adjusted issue price (basis) at the beginning of the second accrual period is equal to the issue price plus the portion of original issue discount included in the first accrual period ($845.90 = $800 + $45.90). The includable original issue discount and basis is determined for each subsequent period in the same manner. [Table not included. See ED. NOTE.]

Or. Admin. Code § 150-316-0511

RD 11-1988, f. 12-19-88, cert. ef. 12-31-88; Renumbered from 150-316.680(2)(a), REV 64-2016, f. 8-15-16, cert. ef. 9/1/2016; REV 52-2017, f. & cert. ef. 8/3/2017

Attachment referenced is not included in rule text. Click here for PDF of attachment.

Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and ORS 183.355(6).]

Stat. Auth.: ORS 305.100

Stats. Implemented: ORS 316.680