Accrued market discount on US T-Bill, Form 1099-B?

Forum|Forum|2 years ago
February 19, 2024
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Received Form 1099B with some accrued market discount for a T-Bill transaction, is this to be reported as interest? All other T-bill transactions are reported on the 1099-INT form as "interest from US government securities or Treasury obligations" but for some reason, this single T-bill purchase is included here.

Would appreciate any guidance on how to treat this?

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DianeW777

No, the accrued market discount is not reported each year on Treasury Bills purchased at a discount. Market discount only becomes taxable in the year the bond is sold or redeemed. Also unlike OID, market discount is taxable income regardless of the tax-exempt nature of a bond's interest income at maturity/redemption.

Accrued market discount is the gain in the value of a discount bond expected from holding it for any duration until its maturity. Because discount bonds are sold below face value, it is expected that they will gradually rise in market price until reaching maturity.