I'm no tax expert, but I'm fairly sure buying CFC-B at a $5 discount to par doesn't invoke OID provisions. I believe those are for when an issue is originally sold at a discount.
In any case, CFC-B is best held in an IRA because it makes regular interest payments with will probably swamp the OID vs. capital gain issue. If you want better tax treatment, buy BML-Q. It's current yield is about 9.7% and it pays qualified dividends, making it a great deal for a taxable account if you can stomach the increased risk of a non-cumulative direct corporate preferred.
Short and medium term I agree that buying this in the 19's is a good investment - I also agree it will outperform the market in the next year. Longer term though I like other high divi stocks whose underlying assets increase with inflation. With the roller coaster of the banks - also trying to use this to make some conservative cap gains also.(Downside is limited vs common)
Bought some CFCPRB yesterday(actually bought some back fromm what I had sold) when it went below 19.50 then tried to buy more but didn't get it. Driving home I panic because I here on Bloomburg radio that BAC and the other banks are downgraded. Made my timing look really really bad - kicking myself at how stupid I am!!! At home on CNBC the consenses seemed to be that the downgrade was expected(of course I didn't know that) so all night I still expected a big loss on my buy yesterday. Then this morning all is rosy! I am so glad that I only play with a small % of my total - otherwise - I will never live to enjoy my retirment. So the question today is do I take my profits with a chance to buy at a low 19's again?