The costs basis for the interim principal payments received on inherited agency bonds should be the FMV on the date of death. If you are holding these bonds until their maturity, you will want to keep a copy of the death certificate and the documentation you have showing the FMV with your bond records. When these are matured and you cash in the bonds, you will need the date of death for the date of acquisition and the FMV of the bonds on the date of death for the costs basis of these bonds.
