Who owes tax on HH Bonds where the primary person on the bond has died?

[dmsessler63]

my wife was named on some HH bonds with her mom who passed away. The bonds show a carried interest amount. When those were cashed after the moms death, does the tax on the interest get paid by the estate or my wife. The bonds were registered as "mom" or "daughter", with the mom's ssn on them". Also, I don't have any idea what the cost basis would have been"

[RayW1 · Accepted solution]

ANSWER

Assuming there is no trust, the interest is taxable to the recipient.  Prior to your mother-in-law passing, the tax was hers.  After that point, your wife owes the income tax. 

If a trust was created the income would pass through to the beneficiaries at TOD.  

Series HH bonds are only sold and redeemed at par.  There is no capital gain or loss.