Accumulation Bonds do not make regular payments of interest â?? instead accumulating...
The discount from par value, if any, at the time a bond is issued.
The amount by which the par value of a security exceeds its public offering price at the time it was originally offered to an investor.
The discount from par at which a new bond issue comes to the market. Par Bond A bond selling at par.
A purchase discount offered on some bonds instead of interest. OID is generally treated as interest income to the holder.
When a long-term debt instrument is issued at a price that is lower than its stated redemption value, the difference is called Original Issue Discount (OID).
Is a bond which is sold at a discount to par. It can also be a zero coupon bond. This designation refers to either corporate or treasury bonds. The accretion on these bonds can be subject to taxation even though there is no periodic cash flow.
The discount from par at which a new issue comes to the market. The Internal Revenue Service treats the accretion of this discount over the life of the security as being current income to the holder.
A new bond issue that is usually offered below par. The bond's value is increased (accreted) over its life from the original discounted price up to par. At the bond's maturity, it will be valued at par. Interest on these types of bonds are not paid until maturity. However, the interest is taxed as it is accreted. An example of an OID is a zero coupon bond. See: Accretion; Discount; Maturity Date; New Issue; Par; Zero Coupon Security
A form of interest. You generally include OID in your income as it accrues over the term of the debt instrument, whether or not you receive any payments from the issuer. Examples of investments that report OID are zero coupon bonds and bonds with no stated interest.
The amount by which the stated redemption price at maturity of a debt instrument is more than its issue price.
A new issue bond offered at a discount (below par). The bond's value must be increased (accreted) over its life from the original discounted price up to par. See: Accretion.
The purchase discount offered on some bonds (and similar obligations) in lieu of interest. For example: zero-coupon bonds. OID is generally treated as interest income to the holder rather than as a capital gain.
A discount from the par value of the bond to the original bond purchaser, used as a sales incentive strategy to obtain a lower bond interest rate.
OID. A discount from par value of a bond or debt-like instrument. In structuring a private equity transaction, the use of a preferred stock with liquidation preference or other clauses that guarantee a fixed payment in the future can potentially create adverse tax consequences. The IRS views this cash flow stream as, in essence, a zero coupon bond upon which tax payments are due yearly based on "phantom income" imputed from the difference between the original investment and "guaranteed" eventual payout. Although complex, the solution is to include enough clauses in the investment agreements to create the possibility of a material change in the cash flows of owners of the preferred stock under different scenarios of events such as a buyout, dissolution or IPO.
The amount by which a security's price at issuance is lower than its par value. Under that law, the difference between the issue price and par is treated as tax-exempt income rather than capital gain, if the bonds are held to maturity.
A bond, issued at a dollar price less than par which qualifies for special treatment under federal tax law. Under that law, the difference between the issue price and par is treated as tax-exempt income rather than capital gain, if the bonds are held to maturity.
OID The tax considerations of owning a CMBS REMIC are very complex with at least part of the issue subject to OID tax considerations. A violation of the REMIC qualification for a CMBS cause onerous tax penalties.
The reduction in the issue price of a fixed income obligation (bond or note) below the redemption price. The difference represents interest that will be added to the redemption value of the obligation over time, instead of paying interest in regular intervals. (See tax code sections 1272-1275)
Some maturities of a new bond issue that have an offering price substantially below par; the appreciation from the original price to par over the life of the bonds is treated as tax-exempt income and is not subject to capital gains tax. See also Zero Coupon Bond.