The ever-knowledgeable aj485 gave me a sharp wake-up call about 2 months ago.
Yikes!
I have started to pay taxes on the interest in 2021. I will have to pay taxes on the interest from now on. I will have to keep complete records so the IRS doesn’t charge taxes on interest which has already been paid from 2021 - 2031.
I was trying to find out more about this yesterday, and could find nothing other than if you decide to declare the phantom interest every year for one bond, then you had to do it for all of the bonds that you hold and for all the accrued interest in arrears. I don’t see anything about if you chose to redeem a bond in any given year stating that you then needed to be taxed on the accrued interest from all your other bonds as well.
I am sure AJ provided links at the time, but as usual the TMF search function is worthless. Can one not simply start liquidating a portion of their bonds annually?
IP