I wrote,

- quote -

For the sake of completion here is the relevant description
from Pub 550, Page 11:

If you buy a bond between interest payment
dates, part of the purchase price represents
interest accrued before the date of purchase.
When that interest is paid to you, treat it as a
return of your capital investment, rather than
interest income, by reducing your basis in the
bond.

There is a further discussion on Page 19, most of the
way down the first column on that page.

The wording is a little tricky so I could be misinterpreting
this, but that is how I read it.

Steve
(not a tax pro etc.)

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On Mar 5, 10:44 am, "Tom" <T...[at]cppc.com> wrote:

- quote -

Your labeling system is fine. Just be sure of one thing: that the sum
of the interest (Box 1) matches what's on the 1099-INT.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 5, 10:44 am, "Tom" <T...[at]cppc.com> wrote:

- quote -

Incorporate the accrued interest into your 2009 return.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Tom <Tom[at]cppc.com> wrote:

- quote -

In this situation you do not put the negative interest on your
return until 2009.

It works as follows:

When you buy the bond, the interest you pay the seller is
added to your basis. Then, when you receive the next
coupon payment (or you sell the bond, if that happens first), it
is subtracted back off your basis and you recognize it as negative
interest income.

Steve

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -

corporate bond interest in 2008, but I had corporate accrued interest. Must
have bought it at the end of the year before it declared an interest
payment, but with accrued interest.

So, I would have to enter a negative number, but Taxcut won't let me enter
an INT with a negative number.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Phil Marti" <prm20871[at]verizon.net> wrote in message
news:QbOrl.1428$%u5.71[at]nwrddc01.gnilink.net...
- quote -

At this time I have 7 1099INTs from Fidelity accounts and call them
FID/(last three digits of the account number), or FID/060. Is it reasonable
to add /(C, T, M), or FID/060/C if they are corporate, treasuries, or
municiple bonds? Will the IRS be able to figure the system out, or should I
explain somehow? Or is there a better labeling system?

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Tom" wrote:

- quote -

Input them as separate 1099's.

--
Phil Marti
Clarksburg, MD

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

I have several 1099INT with treasury bonds, corporate bonds and municiple
bonds all on the same statement. The three have different federal and state
treatments.
I also have accrued interest that has to be subtacted from the interest
amounts.

TaxCut assumes the accrued interest is proportional to the interest amounts,
but that isn't necessarily true. For instance, one account is mainly
municiple bonds, but the accrued interest is mainly corporate bond.
So it reduces the corporate bond interest less than it should.

TaxCut's method might result in an error of 5% of the interest. It is
random and could help or hurt me. I tried to enter a "1099INT" with the
accrued interest as negative values to do it accurately, but TaxCut won't
take it.

Can I just go with TaxCut's method and figure it is close enough? I don't
like that, but I don't see any alternative. It is not big dollars; maybe
$50 of tax.
I realize the IRS doesn't even get the accrued interest information, but
still...

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >