If Bob received interest on a loan but did not receive a Form 1099-INT, how should he report the income?

When Bob receives interest income, even in the absence of a Form 1099-INT, he is still required to report that income on his tax return. This ensures compliance with tax regulations which dictate that all income, regardless of documentation, must be accurately reported. Reporting the income on Schedule B is appropriate for several reasons:

Firstly, Schedule B is specifically designed for reporting interest and dividend income. This is where taxpayers provide details about their total interest, particularly when the total exceeds a certain threshold or if they have interest from sources that do not provide a Form 1099-INT.

Secondly, filing Schedule B allows the IRS to cross-verify the interest income against what financial institutions report. This can help maintain transparency and accuracy in tax reporting.

Choosing to omit reporting the interest (which is what another option suggests) would not align with tax law. It's also important to note that the future receipt of a Form 1099-INT does not diminish the obligation to report the income from a prior year if it was earned. Therefore, accurately reporting it on the correct form is the best practice.