What is the proper way to fill out for Zero Coupon Bonds?

Q: I have 1099B proceeds from a TIGR Zero coupon bond. Dealing with Schedule D is driving me nuts though, what is the proper way to fill out for Zero Coupon Bonds. Thanks so much. —Dennis, Easton

The following answer was provided by Mark Misselbeck, CPA, Levine Katz Nannis & Solomon PC, Needham.

A: You should have received Forms 1099OID, during the period you held these bonds. They would indicate the interest earned on the investment that was "left on deposit" with the borrower to compound and earn more interest. Those amounts should be added to your original cost of the bond to arrive at the adjusted cost basis. That amount is then offset to the proceeds from the sale to determine whether you made (or lost) money on the overall investment.