I inherited US savings bonds from my grandmother 8 years ago. They are now at full maturity and I want to use the proceeds to reinvest them in other securities. Am I responsible for tax on the entire interest amout or just the change in value since I took ownership of them?

ANSWER

The BIDaWIZ Team's Answer:

Do you know if the estate paid the interest on the savings bonds through the time until she passed away? You would know this if the accrued interest was reported on your grandmother's final tax return. If this is the case, your tax responsibility would be to pay tax on the interest from the period in which you inherited the savings bonds until the time it matured. If that is not the case, then unfortunately you would have to pay tax on the interest from the purchase date through the date of maturity.