If the cash was not distributed to you, then the amount of cash received from the old bonds are added to the cost basis of the new bonds. Keep a record of this because it is important when the bonds are redeemed.
As far as determining the basis of the old bonds to report in the sales section, do you have any reliable method to figure out what you paid for them originally. Mdfled, the return of principal suggest to me that this was the original basis of the bond and you can report this as a cost basis. TheIntegrator: Do you have any reliable historical information retained suggesting what you paid for the bonds?
As far as the bonds being taxable, the interest paid on the bonds is federally taxable thus any money earned over and above your cost basis in the bonds is taxable and can result in a taxable event.
@TheIntegrator @mdfled
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