Form 1099-B field reference
Form 1099-B Box 1f: Accrued market discount
Form 8949 destination
May require an adjustment and separate ordinary-income reporting
Reconcile this field with the rest of the transaction before calculating gain or loss. A Form 1099-B label does not override the official basis, holding-period, or adjustment rules.
Before filing
What to check
- Identify the debt instrument and acquisition records.
- Do not assume the amount is an additional sale proceed.
- Review the official instructions for the required income and Form 8949 treatment.
How it works
Box 1f mechanics
Market discount arises when a bond is purchased in the secondary market for less than its stated redemption price — often because prevailing interest rates rose after the bond was issued. Under the market discount rules, the discount portion is generally taxed as ordinary interest income rather than capital gain when the bond is sold, redeemed, or matures, which is a meaningfully different result than treating the entire gain as capital. This income is separate from the coupon interest the bond pays along the way; it specifically represents the appreciation from below-face-value purchase price back up toward face value. A taxpayer can elect to include market discount in income as it accrues each year, rather than waiting until disposition, which changes both the timing and the amount reported in the sale year. Box 1f only applies to covered debt instruments, so noncovered bonds won't show a broker-computed figure even if market discount rules still apply to them.
Worked example
A taxpayer buys a bond at a $300 discount to its face value, holds it to maturity, and the broker reports $300 in Box 1f as accrued market discount. That $300 is reported as ordinary interest income, not capital gain — it does not simply flow through as part of the Form 8949 gain calculation.
Box 1f FAQs
Is accrued market discount treated as capital gain?
No. Under the market discount rules it is generally treated as ordinary income, separate from any capital gain on the sale of the bond.
Can I choose to report market discount differently?
Some taxpayers can elect to include market discount in income as it accrues each year rather than at disposition. Review the applicable election rules before assuming the default treatment applies.