Handling the OID and Below Market Loan Rules (Completed)

The Original Issue Discount rules often result in the recognition of income without associated cash, typically an unwelcome tax situation. The OID rules override a taxpayer's normal method of accounting, requiring interest to be allocated over the life of a loan, regardless of when it is actually paid. In this webinar, participants will learn how to tell if a debt instrument has original issue discount, as well as the rules for allocating OID to different accrual periods. It will also explain how the OID rules apply to sales of property in exchange for a note, in which part of the purchase price may be reclassified as interest, converting what would be capital gain to the seller to ordinary income. Finally, Ms. Kowal will cover the below market loan rules, which impute interest on below market loans between related parties.

Who Should Attend
Tax practitioners at all levels who provide advice and return preparation involving debt instruments.

Topics Covered

• Original Issue Discount Rules explanation
• Determining if a debt instrument has original issue discount
• Allocating original issue discount over the life of a loan
• Determining original issue discount on debt instruments issued for property
• Application of below market loan rules

Learning Objectives

• Identify when original issue discount rules apply
• Recognize how to allocate original issue discount interest over the life of a loan
• Differentiate below market loan rules and their application to related party loans

Level
Intermediate

Instructional Method
Group: Internet-based

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
Basic familiarity with debt instruments.

Advance Preparation
None