f1610........clever idea! (kind of like gifting appreciate securities to kid)
but I believe imoldernu is correct in his conclusion.....not that the bond has to be actually cashed.....but , in effect , the same thing since the interest must be declared as income when transfered.
see this:
http://www.marketwatch.com/story/how...-savings-bonds
also see this transfer form:
http://www.treasurydirect.gov/forms/sav4000.pdf
which contains this:
TAX LIABILITY: If the name of a living owner or principal coowner of the bonds is eliminated from the registration, the owner or principal coowner must
include the interest earned and previously unreported on the bonds to the date of the transaction on his or her Federal income tax return for the year of the
reissue. (Both registrants are considered to be coowners when bonds are registered in the form: "A" or "B.") The principal coowner is the coowner who
(1) purchased the bonds with his or her own funds, or (2) received them as a gift, inheritance, or legacy, or as a result of judicial proceedings, and had them
reissued in coownership form, provided he or she has received no contribution in money or money's worth for designating the other coowner on the bonds.
If the reissue is a reportable event, the interest earned on the bonds to the date of the reissue will be reported to the Internal Revenue Service (IRS) by a
Federal Reserve Bank or Branch or the Bureau of the Public Debt under the Tax Equity and Fiscal Responsibility Act of 1982. THE OBLIGATION TO
REPORT THE INTEREST CANNOT BE TRANSFERRED TO SOMEONE ELSE THROUGH A REISSUE TRANSACTION. If you have questions
concerning the tax consequences, consult the IRS, or write to the Commissioner of Internal Revenue, Washington, DC 20224. Unless we are otherwise
informed, the first-named coowner will be considered the principal coowner for the purpose of this transaction.
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