Â· Click the Easy Actions menu, click Return Of Capital, and then fill in the Return Of Capital dialog box. Describe the accrued but unpaid interest as a negative return of capital. (This is the same technique used earlier to deal with accrued interest paid with a bond purchase.)
By entering the return of capital as a negative number, Quicken increases the bond cost, or carrying value, by the accrued interest amount.
Accrued Interest and the 1099-OID Form
Accrued interest income can get messy when, for income tax purposes, you need to record accrued interest that isnâ€™t reported on a 1099-OID form. The reason is that youâ€™re required to report the accrued interestâ€”even though you wonâ€™t get a 1099-OID amount. Later on, when you ultimately do get a 1099-INT or 1099-OID that includes the previously recorded accrued interest, you need to adjust this figure so it doesnâ€™t double-count the accrued interest.
Many people donâ€™t report accrued interest income until itâ€™s reported on a 1099-OID form or actually paid and reported on a 1099-INT form. With this simplified approach, you donâ€™t evade income taxes on the interest income, but you do delay paying the income taxes. Once the interest is accrued, the IRS does insist that you pay income taxes. If this applies to your situation, talk to your tax advisor.