Linda, thanks for your response.
No, we didn't report the accrued interest each year.
IRS Publication 17 talks about an Education Savings Bond Program that allows you to use the proceeds from savings bonds to pay higher education expenses (and, I've been told, to fund a 529), thereby avoiding paying taxes on the accrued interest).
I believe it only applies to bonds purchased after 1989, so it wouldn't be allowed for these (but could be for later others we hold).
Are you (or anyone else) familiar with this or other ways to appropriate the funds from a savings bond redemption to remove any tax liability?
Thanks,
Ken
