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Inherited savings bond

JRP3 — Wed, 01 Apr 2020 18:31:29 GMT

I have several questions regarding an inherited savings bond. My mother passed in July 2019. She had a savings bond that she had purchased naming my father as POD who passed away in 2002. She did not report accrued interest on the bond. I am the executor of the estate and I cashed out the bond and it went into my mothers estate account. The estate received the money in 2020.

1. How do I report the interest received in 2020?

2. Do I need to get a 1099-INT ?

Thanks

Re: Inherited savings bond

CatinaT1 — Wed, 01 Apr 2020 18:48:26 GMT

The estate will get the 1099INT for 2020 and the taxes will be paid out of the estate.

Re: Inherited savings bond

JRP3 — Wed, 01 Apr 2020 19:45:44 GMT

Wouldn't the accrued interest be reported on my moms final return through her date of death? And the balance would be reported on the estate return?

Re: Inherited savings bond

JohnB5677 — Wed, 01 Apr 2020 23:45:55 GMT

Savings bonds do not get a step up in basis. This is due to the fact that savings bonds do not really appreciate in value; they simply accumulate interest which is tax deferred.

Interest on the bonds is taxable in the estate or in the deceased’s final tax return. The beneficiary must pay taxes on the bond’s interest after the date of death. However, it is possible for the estate executor or administrator to assign all of the deferred interest to the beneficiary if his/her tax rates are lower than those of the deceased. Called “income in respect of a decedent,” it can result in a bigger inheritance.

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