I have a client who owned a structured certificate of deposit (FDIC insured) tied to the performance of a market index. The payout of the CD was a "point to point" structure and had no interest payments during the 4 year term. For the past 4 years he was paying original issue discount (OID) interest from form 1099-OID (about $2000 total for the 4 years total.)
It turns out that the market index declined over the 4 year period. So he simply received the principle back ($25,000) with no profit.
There is a 1099-B showing $25,000 for both basis and proceeds.
I believe he can take an ordinary loss of that ~$2000 per Pub 1212 But it is unclear on the exact way to report. Schedule B as a negative amount? Line 21 as a negative amount?
Any suggestions?