Original issue discount. This complicated tax concept requires that an issuer amortize the premium resulting from the difference between the price at which a debt instrument is purchased and the principal amount paid to the holder at maturity, where the difference in the price paid and the premium to be received is certain in both timing and amount. OID calculations can apply to subordinated debt with warrants (or common stock) or, under certain circumstances, preferred stock. Investors who purchase securities subject to OID calculations and treatment will receive taxable income (and therefore use cash to pay taxes) despite their not receiving a corresponding current cash payment. For preferred stock, OID is received only to the extent that the company has earnings and profits during the accrual period.