On a Schwab 1099 Consolidated report, there is a mention of Amortization and Accretion Reporting for Fixed Income. Where does this get reported on the tax forms?
See Pub 550 Bond Premium, How to amortize, How to report
For the rest of you this is basically and adjustment to cost basis for bond premiums, OID etc reported on an annual basis, IF you've made the election to do so.
Generally an adjustment to interest earned, but if exceeds interest income, is a Sch A 2%
, Sultan of SnarkAll Star
I'm retiring and I have no pride left, so I'll answer.
I haven't a clue.
EDIT: But look what I found: http://www.americanbanker.com/glossary/a.html
Now all we need to do is figure out what a Z Tranche is.
, Arrgh, Matey!All Star
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Personally I would start IRS.Gov and search for accretion. I would then call Schwab and ask them for more information.
Seems I've stumped the pros and the IRS. I couldn't get a definitive answer from Charles Schwab nor the IRS either. From my conversations, it appears that the information is essentially a basis adjustment due to the purchase of the bond being above or below face value. But the difference shown by Schwab for the face value and the cost basis do not equal the amortization/accretion. It may be that the amortization/accretion is accumulative year to year. In any case, the information is not relevant until the bonds are sold. In my client's case, the bonds were not sold in 2011, so I have at least another year to worry about the basis effect.
My dictionary defines accretion as gradual growth or something added to increase growth.The word comes from the same root as accrue.
My interpretation is, since the account pays a fixed amount each period, some of the account's increase remains in the account, yet may, or may not, be currently taxable.
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