“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.”
( you know all this, of course, but I’m just thinking out loud )
https://www.investopedia.com/ask/answers/111314/how-are-savi….
“Owners can wait to pay the taxes when they cash in the bond, when the bond matures, or when they relinquish the bond to another owner. Alternatively, they may pay the taxes yearly as interest accrues. Most owners choose to defer the taxes until they redeem the bond.”
“Owners can wait to pay the taxes when they cash in the bond, when the bond matures, or when they relinquish the bond to another owner. Alternatively, they may pay the taxes yearly as interest accrues. Most owners choose to defer the taxes until they redeem the bond.”
The above paragraphs from the Investopedia article are sourced from the IRS, per the footnotes.
https://www.treasurydirect.gov/indiv/research/indepth/ebonds…
The problem with selling them is that only $10k per SSN can be invested
in I-bonds, and the I-bonds yield many multiples above the pathetic yield on MMF/s, CD’s, or bank
accounts. So the rungs on the I-bond ladder would be getting taken out. This isn’t a problem
if you’re not building a position in I-bonds, as you just buy a new one to take the place of the
one sold. But if say a 10 rung ( years ) ladder is wanted, and you’re still accumulating rungs,
then I don’t see any loophole, either pay taxes yearly and keep meticulous records, or have a much bigger tax bite to deal with whenever maturity or liquidation occur.