 Deminimus OID. The OID is deminimus if it is less than one-fourth of 1% .0025 of the stated redemption price at maturity principal amount of the loan multiplied by the number of full years from the date of original issue to maturity term of the loan. So if the OID is deminimus, you can choose one of the following ways to figure the amount of points you can deduct each year. So on a constant yield basis over the term of the loan or on a straight line basis over the term of the loan, the straight line basis is probably is clearly the easier method. So in proportion to stated interest payments and so then you can that's another way that you can do it try to tie it to the you know proportion it out to the interest payments. So in its entirety at maturity of the loan, which is probably the worst way, but if it's insignificant it won't really matter but you'd rather be deducted than sooner rather than later. So you make this choice by deducting the OID points in a manner consistent with the method chosen on your timely file tax return for the tax year in which the loan is issued. Alright example, Carol took out a $100,000 mortgage loan on January 1st, 2022 to buy a house she will use as rental during 2022. The loan is to be repaid over 30 years. So that's a long loan. So during 2022, I mean it's a standard loan but it's also quite long. I mean that's about similar to the life that if you had to capitalize it as an asset in terms of the cost of the property, right? So in any case during 2022 Carol paid $10,000 of mortgage interest stated interest to the lender. When the loan was made she paid $1,500 in points to the lender. The points reduced the principal amount of the loan from $100,000 to $98,500 resulting in $1,500 OID. So Carol determined that the points OID she paid are de minimis based on the following computation. So there's small amount of points based on the computation which means she has the flexibility to do more what she wants with how she's going to allocate the points like a straight line method. The easy thing to do. So redemption price at maturity principal amount of the loan is $100,000 multiplied by the term of the loan in complete years 30 and multiplied by .0025 de minimis amount is $7,500. So she's good. The points OID she paid $1,500 are less than the de minimis amount $7,500. So therefore Carol has de minimis OID and she can choose one of the following four ways discussed earlier to figure the amount she can deduct each year. So she chooses the straight line method because she's not because that's easy. Under the straight line method she can deduct $50 each year for 30 years. So in practice that means you put it on the books as you know the same depreciation kind of schedules but not as part of the building itself but rather as the points that you're going to allocate not over the useful life of the building but rather over its own life straight line allocation of 30 years in this case because that's the years of the loan. All right constant yield method if the OID isn't de minimis you must use the constant yield method to figure how much you can deduct each year. Oh no please no so you figure your deduction for the first year in the following manner. Okay so number one determine the issue price of the loan. If you paid points on the loan the issue price is generally the difference between the principal and the points. Two, multiply the result in one by the yield to maturity defined later. Three, subtract any qualified stated interest payments defined later from the result in two. This is the OID you can deduct in the first year.