IRS Form 1099-INT: How to Account for Accrued Interest on Bond Purchases

The IRS Form 1099-INT reports interest income paid to the recipient.
When bonds are bought and sold between interest payment debts, the buyers and sellers must account for accrued interest.
If a holder sells a bond with accrued interest, and amount of the accrued interest is added to the sale price and taxable to the seller - not the buyer that purchased the bond.
The Form 1099-INT does not include a field that shows the amount of accrued interest paid on purchases. These details are generally provided by the broker or custodian as supplemental information so the holds can make the appropriate adjustments.
The gross amount of interest income is reported on Schedule, with appropriate adjustments to reduce interest by accrued interest paid on purchases, and reductions for the amortization of bond premium.
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