If you have to report an Accrued Market Discount, use the instructions below for reporting.
1099-B with accrued market discount in box 1f
Report your 1099-B in the program under:
- Federal Section
- Income
- Investments
- Stocks, Mutual Funds, Cryptocurrency, Collectibles, etc.
- Use the worksheet in the 8949 instructions to figure the amount to enter as an adjustment to the entry. (Enter as a negative amount)
- Check the box 'Form 1099-B showing accrued market discount in box 1f
- Follow the instructions for the 1099-INT entry provided next
1099-INT entry
After making the entry for the 1099-B, you will need to add the interest into the return to be taxed as interest rather than as ordinary income.
- Federal Section
- Income
- 1099-INT, DIV, OID
- Did you earn any interest or dividend income from a bank, brokerage firm or some other financial institution?
- Add a Interest income (form 1099-B)
- Enter the 1099-B you received for the discount
- Enter the amount you reported as a negative adjustment on your 1099-B as a positive amount in the 'Accrued market discount' box
Partial payment of principal
If you received a partial payment of principal on a bond, don't use the worksheet. Instead, enter the smaller of the accrued market discount or your proceeds. Also, report it as interest on your tax return.
Wash Sale
If the disposition of a market discount bond results in a loss subject to the wash sale rules, report the sale or exchange as an investment (above) and enter the amount of the nondeductible loss as a positive number. Check the box (W) for 'Nondeductible Loss from a Wash Sale'