Sweetie you too , I would like to get someone else's opinion. Critter2# you are incorrect. Sometimes the decedent will declare the deferred interest income on their on their final income tax filing. In this case, that did not occur. As the person who inherits the savings bond, I pay taxes on the deferred interest income. Since the bond was also valued at face value as part of the estate it was taxed there. The face value included deferred income since it was converted from a series EE bond. I am entitled to a tax credit from the IRS which is related to "income with respect to decedent" to avoid double taxation on the deferred interest income. By the way, no where does this question ask about income with respect to decedent, that was a completely different question.
