[Code of Federal Regulations]
[Title 26, Volume 13]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR]

[Page 287-292]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Procedure and Administration--Table of Contents
 
Sec.  1.6049-1  Returns of information as to interest paid in calendar 

years before 1983 and original issue discount includible in gross income 
for calendar years before 1983.

    (a) Requirement of reporting--(1) In general. (i) Every person who 
makes payments of interest (as defined in Sec.  1.6049-2) aggregating 
$10 or more to any other person during a calendar year before 1983 shall 
make an information return on Forms 1096 and 1099 for such calendar year 
showing the aggregate amount of such payments, the name and address of 
the person to whom paid, the total of such payments for all persons, and 
such other information as is required by the forms.In the case of 
interest paid during calendar years beginning with 1963 and continuing 
until such time as the Commissioner determines that it is feasible to 
aggregate payments on two or more accounts, insurance contracts, or 
investment certificates and this subdivision is amended accordingly to 
provide for reporting on an aggregate basis, the requirement of this 
subdivision for the filing of Form 1099 will be met if a person making 
payments of interest to another person on two or more such accounts, 
insurance contracts, or investment certificates, files a separate Form 
1099 with respect to each such account, contract, or certificate on 
which $10 or more of interest is paid to such other person during the 
calendar year. In the case of evidences of indebtedness described in 
section 6049(b)(1)(A), separate Forms 1099 may be filed as provided in 
the preceding sentence with respect to holdings in different issues. 
Thus, if a bank pays to a person interest totaling $15 on one account 
and $20 on a second account, it may file separate Forms 1099 with 
respect to the payments of $15 and $20. If the interest on the second 
account totaled $5 instead of $20, no return would be required with 
respect to the $5.
    (ii)(a) Every person which is a corporation that has outstanding any 
bond, debenture, note, or certificate or other evidence of indebtedness 
(referred to in this section and Sec.  1.6049-2 as an obligation) in 
``registered form'' (as defined in paragraph (d) of Sec.  1.6049-2) 
issued after May 27, 1969 (other than an obligation issued by a 
corporation pursuant to a written commitment which was binding on May 
27, 1969, and at all times thereafter) and on or before December 31, 
1982, as to which there is during any calendar year before 1983 an 
amount of original issue discount (as defined in Sec.  1.6049-2) 
aggregating $10 or more includible as interest in the gross income for 
such calendar year of any holder (determined, if semiannual record date 
reporting is being used under (b)(1) of this subdivision, by treating 
each holder as holding the obligation on every day it was outstanding 
during the calendar year), shall make an information return on Forms 
1096 and 1099-OID for such calendar year showing the following:
    (1) The name and address of each record holder for whom such 
aggregate amount of original issue discount is $10 or more and, for 
calendar years subsequent to 1972, the account, serial, or other 
identifying number of each obligation for which a return is being made.
    (2) The aggregate amount of original issue discount includible by 
each such holder for the period during the calendar year for which the 
return is made (or, if the aggregation rules of (b)(2) of this 
subdivision are being used, that he held the obligations). If however, 
the semiannual record date reporting rules are being used under (b)(1) 
of this subdivision, such aggregate amount shall be determined by 
treating each such record date holder as if he held each such obligation 
on every day it was outstanding during the calendar year. For purposes 
of this section, an obligation shall be considered to be outstanding 
from the date of original issue (as defined in paragraph (b)(3) of Sec.  
1.1232-3). In the case of a time deposit open account arrangement to 
which paragraph (e)(5) of Sec.  1.1232-3A applies, for example, the 
amount to be shown under this subdivision (2) on the Forms 1096 and 
1099-OID is the sum (computed under such paragraph (e)(5)) of the 
amounts separately computed

[[Page 288]]

for each deposit made pursuant to the arrangement.
    (3) The issue price of the obligation (as defined in paragraph 
(b)(2) of Sec.  1.1232-3).
    (4) The stated redemption price of the obligation at maturity (as 
defined in paragraph (b)(1)(iii) of Sec.  1.1232-3).
    (5) The ratable monthly portion of original issue discount with 
respect to the obligation as defined in section 1232(a)(3)(A) 
(determined without regard to a reduction for a purchase allowance or 
whether the holder purchased at a premium).
    (6) The name and address of the person filing the form.
    (7) Such other information as is required by the form. And,
    (8) The sum, for all such holders of the aggregate amounts of such 
original issue discount includible for such calendar year for each such 
holder.
    (b) With respect to any obligation (other than an obligation to 
which paragraph (e) or (f) of Sec.  1.1232-3A applies (relating 
respectively to deposits in banks and similar financial institutions and 
to face-amount certificates)), the issuing corporation (or an agent 
acting on its behalf):
    (1) Shall be permitted (until this subdivision (1) is amended) to 
prepare a Form 1099-OID only for each person who is a holder of record 
of the obligation on the semiannual record date (if any) used by the 
corporation (or agent) for the payment of stated interest or, if there 
is no such date, the semiannual record dates shall be considered to be 
June 30, and December 31.
    (2) Shall be permitted to aggregate all original issue discount with 
respect to 2 or more obligations of the same issue for which the amounts 
specified in (a)(2), (a)(3), (a)(4), and (a)(5) of this subdivision are 
proportional and, therefore, may file one Form 1099-OID for all such 
obligations being aggregated, except that for calendar year 1971 this 
aggregation rule shall apply only where such specified amounts are 
identical. For an illustration of proportional aggregation, see example 
(4) in (d) of this subdivision.
    (c) In any case in which any one holder of a particular obligation 
for the calendar year held such obligation on more than one record date, 
only one Form 1099-OID shall be filed for that year with respect to that 
holder and that obligation. This provision applies only in the case in 
which any corporation prepares Forms 1099-OID in accordance with the 
record date reporting rule of (b)(1) of this subdivision.
    (d) The requirements of (a)(3), (a)(4), and (a)(5) of this 
subdivision shall not apply to a time deposit open account arrangement 
to which paragraph (e)(5) of Sec.  1.1232-3A applies, or to a face-
amount certificate to which paragraph (f) of Sec.  1.1232-3A applies.
    (e) The provisions of this subdivision (ii) may be illustrated by 
the following examples:
    Example (1). On January 1, 1971, a corporation issued a 10-year bond 
in registered form which pays stated interest to the holder of record on 
June 30 and December 31. The bond has an issue price (as defined in 
paragraph (b)(2) of Sec.  1.1232-3) of $7,600, a stated redemption price 
(as defined in paragraph (b)(1) of Sec.  1.1232-3) at maturity of 
$10,000, and a ratable monthly portion of original issue discount (as 
defined in section 1232(a)(3)(A)) of $20. The corporation's books 
indicate that A was the holder of record on June 30, 1971, and B was the 
holder on December 31, 1971. Under (b)(1) of this subdivision, the 
corporation is permitted to file separate Forms 1099-OID for both A and 
B showing, on each form, all items required by (a) of this subdivision, 
including the total original issue discount of $240 for the entire 
calendar year (which includes original issue discount for all holders), 
the issue price of $7,600, the stated redemption price at maturity of 
$10,000, and the ratable monthly portion of original issue discount of 
$20.
    Example (2). Assume the facts stated in Example (1), except that A 
is recorded on the books of the corporation as holding the bond on June 
30 and December 31, 1971. The corporation shall complete and file only 
one Form 1099-OID for A.
    Example (3). Assume the facts stated in Example (1), except that the 
books of the corporation show that A held 2 of the bonds at all times in 
1971. The amounts of the items listed in (a)(2), (a)(3), (a)(4), and 
(a)(5) of this subdivision are identical for the 2 bonds. Under (b)(2) 
of this subdivision, the corporation is permitted to treat the 2 bonds 
as one for purposes of completing and filing a Form 1099-OID for 1971 
and aggregate the amounts being reported.
    Example (4). On January 1, 1972, a corporation issued to C 3 bonds 
in registered form of the same issue with stated redemption prices of 
$1,000, $5,000, and $10,000. The aggregate amounts of original issue 
discount for each year, the issue prices, the stated redemption prices, 
and the monthly portions of original

[[Page 289]]

issue discount are the same for each $1,000 of stated redemption price. 
Thus, all relevant amounts for any one bond are proportional to such 
amounts for any other bond. Therefore, so long as C holds the bonds the 
corporation shall be permitted to aggregate on one Form 1099-OID all 
original issue discount with respect to such obligations in accordance 
with (b)(2) of this subdivision.
    Example (5). On June 1, 1971, a corporation issues a 10-year bond to 
D, for which the ratable monthly portion of original issue discount is 
$10. For 1971, the corporation uses the record date reporting system 
permitted by (b)(1) of this subdivision. The corporation's books show 
that E held the bond on June 30, 1971, and that F held the bond on 
December 31, 1971, the dates on which the corporation pays stated 
interest on the bond. The corporation shall file a Form 1099-OID for 
both E and F showing on each form the aggregate amount of original issue 
discount includible for 1971 or $70 since E and F are each treated as if 
each held the bond every day it was outstanding and it was outstanding 7 
months in 1971. As to D, the corporation is not required to file a Form 
1099-OID since D did not hold the bond on either of the 2 record dates.

    (iii) Every person who during a calendar year before 1983 receives 
payments of interest as a nominee on behalf of another person 
aggregating $10 or more shall make an information return on Forms 1096 
and 1087 for such calendar year showing the aggregate amount of such 
interest, the name and address of the person on whose behalf received, 
the total of such interest received on behalf of all persons, and such 
other information as is required by the forms.
    (iv) Except with respect to an obligation to which paragraph (e) or 
(f) of Sec.  1.1232-3A applies (relating respectively to deposits in 
banks and similar financial institutions and to face-amount 
certificates), every person who is a nominee on behalf of the actual 
owner of an obligation as to which there is original issue discount 
aggregating $10 or more includible in the gross income of such owner 
during a calendar year before 1983, regardless of whether he receives a 
Form 1099-OID with respect to such discount, shall make an information 
return on Forms 1096 and 1087-OID for such calendar year showing in the 
manner prescribed on such forms the same information for the actual 
owner as is required or permitted in subdivision (ii) of this 
subparagraph for the record holder.
    (v) Notwithstanding the provisions of subdivisions (iii) and (iv) of 
this subparagraph, the filing of Form 1087 or Form 1087-OID is not 
required if:
    (a) The record owner is required to file a fiduciary return on Form 
1041 disclosing the name, address, and identifying number of the actual 
owner;
    (b) The record owner is a nominee of a banking institution or trust 
company exercising trust powers, and such banking institution or trust 
company is required to file a fiduciary return on Form 1041 disclosing 
the name, address, and identifying number of the actual owner; or
    (c) The record owner is a banking institution or trust company 
exercising trust powers, or a nominee thereof, and the actual owner is 
an organization exempt from taxation under section 501(a) for which such 
banking institution or trust company files an annual return,

but only if the name, address, and identifying number of the record 
owner are included on or with the Form 1041 fiduciary return filed for 
the estate or trust or the annual return filed for the tax exempt 
organization.
    (vi) Every person carrying on the banking business who makes 
payments of interest to another person (whether or not aggregating $10 
or more) during a calendar year with respect to a certificate of deposit 
issued in bearer form (other than such a certificate issued in an amount 
of $100,000 or more) shall make an information return on Forms 1096 and 
1099-BCD for such calendar year. The preceding sentence applies whether 
such payments are made during the term of the certificate or at its 
redemption. The information return required by this subdivision for the 
calendar year shall show the following:
    (a) The name, address, and taxpayer identification number of the 
person to whom the interest is paid;
    (b) The aggregate amount of interest paid to such person during the 
calendar year with respect to the certificate of deposit;
    (c) The name, address, and taxpayer identification number of the 
person to whom the certificate was originally issued;

[[Page 290]]

    (d) The portion of the interest with respect to the certificate 
reported under (b) that is attibutable to the current calendar year; and
    (e) Such other information as is required by the form.

The application of this subdivision (vi) may be illustrated by the 
following examples:

    Example (1). On June 1, 1978, X Bank issues a $1,000 bearer 
certificate of deposit to A. The certificate of deposit is not 
redeemable until May 31, 1979, and no interest is to be paid on the 
instrument until its redemption. On September 1, 1978. A transfers the 
bearer certificate to B and on May 31, 1979, B presents the certificate 
to X for payment and receives the $1,000 principal amount plus all the 
accrued interest. Under paragraph (a)(1)(vi) of this section, X is not 
required to make an information return for 1978 with respect to the 
bearer certificate of deposit because no interest is actually paid to a 
holder of the certificate during 1978. X is required to file an 
information return for 1979 with respect to the certificate, identifying 
B as the payee of the entire amount of the interest and A as the 
original purchaser of the certificate. (For rules relating to statements 
to be made to recipients of interest payments, see Sec.  1.6049-3.)
    Example (2). On July 1, 1978, Y Bank issues a $5,000 bearer 
certificate of deposit to C. The certificate of deposit is not 
redeemable until June 30, 1981, and no interest is to be paid on the 
instrument until its redemption. C holds the certificate for the entire 
term and on June 30, 1981, presents it to Y for payment and receives the 
$5,000 principal amount plus the accrued interest. Under paragraph 
(a)(1)(vi) of this section, Y is not required to file an information 
return for calendar years 1978, 1979, or 1980 with respect to this 
bearer certificate of deposit because no interest is acutally paid to C 
during those calendar years. Y is required to file an information return 
for 1981 with respect to the certificate identifying C as the payee of 
the entire amount of the interest and as the original purchaser. 
(Although Y is not required to file an information return for interest 
paid on the certificate until its redemption in 1981, C must report as 
income on his tax returns for 1978, 1979, 1980, and 1981 the ratable 
portion of such interest includible in income under section 1232.)

    (2) Definitions. (i) The term ``person'' when used in this section 
does not include the United States, a State, the District of Columbia, a 
foreign government, a political subdivision of a State or of a foreign 
government, or an international organization. Therefore, interest paid 
by or to one of these entities need not be reported. Similarly, original 
issue discount in respect of an obligation issued by or to one of these 
entities need not be reported.
    (ii) For purposes of this section, a person who receives interest 
shall be considered to have received it as a nominee if he is not the 
actual owner of such interest and if he was required under Sec.  1.6109-
1 to furnish his identifying number to the payer of the interest (or 
would have been so required if the total of such interest for the year 
had been $10 or more), and such number was (or would have been) required 
to be included on an information return filed by the payer with respect 
to the interest. However, a person shall not be considered to be a 
nominee as to any portion of an interest payment which is actually owned 
by another person whose name is also shown on the information return 
filed by the payer or nominee with respect to such interest payment. 
Thus, in the case of a savings account jointly owned by a husband and 
wife, the husband will not be considered as receiving any portion of the 
interest on that account as a nominee for his wife if his wife's name is 
included on the information return filed by the payer with respect to 
the interest.
    (iii) For purposes of this section, in the case of a person who 
receives a Form 1099-OID, the determination of who is considered a 
nominee shall be made in a manner consistent with the principles of 
subdivision (ii) of this subparagraph.
    (iv) For purposes of this section and Sec.  1.6049-3, the term 
``Form 1099-OID'' means the appropriate Form 1099 for original issue 
discount prescribed for the calendar year.
    (3) Determination of person to whom interest is paid or for whom it 
is received. For purposes of applying the provisions of this section, 
the person whose identifying number is required to be included by the 
payer of interest on an information return with respect to such interest 
shall be considered the person to whom the interest is paid. In the case 
of interest received by a nominee on behalf of another person, the

[[Page 291]]

person whose identifying number is required to be included on an 
information return made by the nominee with respect to such interest 
shall be considered the person on whose behalf such interest is received 
by the nominee. Thus, in the case of interest made payable to a person 
other than the record owner of the obligation with respect to which the 
interest is paid, the record owner of the obligation shall be considered 
the person to whom the interest is paid for purposes of applying the 
reporting requirements of this section, since his identifying number is 
required to be included on the information return filed under such 
section by the payer of the interest. Similarly, if a stockbroker 
receives interest on a bond held in street name for the joint account of 
a husband and wife, the interest is considered as received on behalf of 
the husband since his identifying number should be shown on the 
information return filed by the nominee under this section. Thus, if the 
wife has a separate account with the same stockbroker, any interest 
received by the stockbroker for her separate account should not be 
aggregated with the interest received for the joint account for purposes 
of information reporting. For regulations relating to the use of 
identifying numbers, see Sec.  1.6109-1.
    (4) Determination of person by whom original issue discount is 
includible or for whom a Form 1099-OID showing original issue discount 
is received. For purposes of applying the provisions of this section, 
the determination of the person by whom original issue discount is 
includible or for whom a Form 1099-OID is received shall be made in a 
manner consistent with the principles of subparagraph (3) of this 
paragraph.
    (5) Inclusion of other payments. The Form 1099 filed by any person 
with respect to payments of interest to another person during a calendar 
year prior to 1972 may, at the election of the maker, include payments 
other than interest made by him to such other person during such year 
which are required to be reported on Form 1099. Similarly, the Form 1087 
filed by a nominee with respect to payments of interest received by him 
on behalf of any other person during a calendar year prior to 1972 may 
include payments of dividends received by him on behalf of such person 
during such year which are required to be reported on Form 1087. 
However, except as provided in subparagraph (1)(ii) (b) of this 
paragraph, a separate Form 1087-OID or 1099-OID shall be filed for each 
obligation in respect of which original issue discount is required to be 
reported for any calendar year before 1983. In addition, any person 
required to report payments on both Forms 1087, 1087-OID, 1099, and 
1099-OID, for any calendar year may use one Form 1096 to summarize and 
transmit such forms.
    (b) When payment deemed made. For purposes of section 6049, interest 
is deemed to have been paid when it is credited or set apart to a person 
without any substantial limitation or restriction as to the time or 
manner of payment or condition upon which payment is to be made, and is 
made available to him so that it may be drawn at any time, and its 
receipt brought within his own control and disposition.
    (c) Time and place for filing--(1) Payment of interest. The returns 
required under this section for any calendar year for the payment of 
interest shall be filed after September 30 of such year, but not before 
the payer's final payment for the year, and on or before February 28 of 
the following year with any of the Internal Revenue Service Centers, the 
addresses of which are listed in the instructions for Form 1096. For 
extensions of time for filing returns under this section, see Sec.  
1.6081-1.
    (2) Original issue discount. (i) The returns required under this 
section for any calendar year for original issue discount shall be filed 
after December 31 of such year and on or before February 28 of the 
following year with any of the Internal Revenue Service Centers, the 
addresses of which are listed in the instructions for Form 1096. For 
extensions of time for filing returns under this section, see Sec.  
1.6081-1.
    (ii) The time for filing returns for the calendar year 1971 required 
under this section for original issue discount in respect of obligations 
to which paragraph (e) of Sec.  1.1232-3A applies (relating to deposits 
in banks and other similar financial institutions) is extended to April 
15, 1972.

[[Page 292]]

    (d) Penalty. For penalty for failure to file the statements required 
by this section, see Sec.  301.6652-1 of this chapter (Regulations on 
Procedure and Administration).
    (e) Permission to submit information required by Form 1087 or 1099 
on magnetic tape. For rules relating to permission to submit the 
information required by Form 1087 or 1099 on magnetic tape or other 
media, see Sec.  1.9101-1.


(Secs. 6049 (a), (b), and (d) and 7805 of the Internal Revenue Code of 
1954 (96 Stat. 592, 594; 26 U.S.C. 6049 (a), (b), and (d); 68A Stat. 
917, 26 U.S.C. 7805), and in sec. 309 of the Tax Equity and Fiscal 
Responsibility Act of 1982 (96 Stat. 591)

[T.D. 6628, 27 FR 12800, Dec. 28, 1962, as amended by T.D. 6879, 31 FR 
3494, Mar. 8, 1966; T.D. 6883, 31 FR 6589, May 8, 1966; T.D. 7000, 34 FR 
996, Jan. 23, 1969, T.D. 7154, 36 FR 25009, Dec. 28, 1971; 37 FR 527, 
Jan. 13, 1972; T.D. 7311, 39 FR 11881, Apr. 1, 1974; T.D. 7584, 44 FR 
1103, Jan. 4, 1979; T.D. 7881, 48 FR 12968, Mar. 28, 1983]