Today the IRS issued final regulations (TD 9713) relating to information reporting by brokers for bond premium and acquisition premium. The Treasury Decision also includes final and temporary regulations relating to information reporting by brokers for transactions involving debt instruments and options, including the reporting of original issue discount (OID) on tax-exempt obligations, the treatment of certain holder elections for reporting a taxpayer’s adjusted basis in a debt instrument, and reporting of transfers of Section 1256 options and debt instruments. The text of the temporary regulations also serves as the text of proposed regulations.
The final and temporary regulations generally adopt the provisions of the 2013 proposed interest reporting regulations with certain clarifications. The final rules differ from the 2013 regulations by requiring a broker to report OID adjusted for acquisition premium based on the ratable method. This change conforms the rules for reporting OID with the rules for reporting adjustments to basis attributable to acquisition premium.
The rules will be effective on March 13, 2015 when they will be published in the Federal Register. Comments on the proposed regulations must be received by June 11, 2015.