Whhere in ProSeries do you enter Coveredd Securities Transactions: Ordinary? Same 1099 has the usual Short Ter Covered and Long Term Covered but this "Ordinary" has me baffled.

[poolcleaner]

Whhere in ProSeries do you enter Coveredd Securities Transactions: Ordinary? Same 1099 has the usual Short Ter Covered and Long Term Covered but this "Ordinary" has me baffled. I have seen it treated differently from other brokers where you enter the numbers to make it a gain or loss and then enter the accrued market discount as interest incme.  It looks like the same result.

[Terry53029]

Is your client a trader that has elected "Mark to Market" if yes then ordinary would be reported on form 4797.

[poolcleaner]

No, an investot.  These are accrued market discount on bonds so there is isially a capital loss and ithenordinary income.The only logical result I can see is part ending up on Sch D and some as ordinary income.

[Terry53029 · Accepted solution]

If they are  bonds purchased at a discount then any gain would be ordinary interest income up to face value. Anything over face value would be capital gain, or loss. Also be sure to see if your client claimed any interest (would have received a 1099 OID) in prior years. Here is an article from The Tax Advisor that explains it very well.  https://www.thetaxadviser.com/issues/2007/oct/taxtreatmentofmarketdiscountbonds/

[poolcleaner]

That is the way I have alwayys seen thiese bonds treated with a Sch D  transaction on the worksheet and then an interest income entry.  These would end up with the same mount of tax but a listing under other income and a Sch D transaction.  By the way, this is not an obscure unknown brokerage house, AI has it entered on the D worksheet and then making an adjustment to send ito send what you and I consider to be interest to Other Income.  I may discuss with Copilot!  Google AI says they are using ProSeries instructions so Ill see if GPT does the same.Thank you for your help.

[poolcleaner]

Forgot to saay thank you for the very helpful link.